Australian FOREX Daily Outlook 06/10/2006

European Central Bank raises rates as expected to 3.25%. Bank of England keeps their rates steady. Choppy trading in the forex markets.

CURRENCY TRADING SUMMARY –6 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) was largely unchanged against the majors in the foreign exchange trading session as initial jobless claims fell more than expected. US initial jobless claims fell by 17k to 302k, the lowest level seen since July this year. FOMC Plosser pointed towards upside risks to inflation and that it would be wise to be patient and see what eventuates. In other markets, the Dow Jones index finished again at record highs, rising 16pts while the NASDAQ finished up 15pts. Crude oil rose by US54c to US$59.95 a barrel as OPEC announced it would cut production by approximately 1 million barrels a day. Looking ahead, the all important Non-Farm Payrolls and the unemployment rate are due for release tonight.
  

• The Euro (EUR) traded within a low of 1.2672 and a high of 1.2726, before closing at 1.2691 in the New York session. On the data front, the ECB announced that they were to lift interest rates to 3.25%. ECB President Trichet expressed concern about inflationary risks and warned of further hikes possibly in December.
  

• The Japanese Yen (JPY) traded within a low of 117.45 and a high of 117.76 versus the dollar, before closing at 117.69 in the New York session. Looking ahead, leading indicators are due out today.
  

• The Sterling (GBP) traded within a low of 1.8751 and a high of 1.8870, before closing at 1.8790 in the New York session. On the data front, the Bank of England announced that they were to keep rates steady at 4.75%. Looking ahead, industrial production is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7440 and a high of 0.7477, before closing at 0.7460 in the New York session.
  

• Gold (XAU) strengthened by US$8.80 to US$574.70 an ounce as the rebound in oil prices helped the precious metal.

TECHNICAL COMMENTARY

• Euro 1.2715

Initial support at 1.2639 (Sep 29 reaction low) followed by 1.263 (Sep 15 reaction low). Initial resistance is now located at 1.2769 (Oct 3 high) followed by 1.2834 (Sep 22 reaction high).

• Yen 117.80

Initial support is located at 117.32 (Sep 29 low) followed by 116.89 (Sep 27 low). Initial resistance is now at 118.41 (Oct 2 high) followed by 118.56 (Multi-year key trend line / triangle resistance).

• Pound – 1.8860

Initial support at 1.875 (Oct 5 low) followed by 1.8676 (Oct 2 low). Initial resistance is now at 1.8907 (61.8% retracement of the 1.9076 to 1.8633 decline) followed by 1.8919 (Sep 28 high).

• Australian Dollar – 0.7455

Initial support at 0.7417 (Oct 4 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7495 (Oct 2 high) followed by 0.7557 (Sep 26 high).

• Gold – 567

Initial support at 560.13 (Oct 4 low) followed by 554.4 (Jun 15 low). Initial resistance is now at 580.96 (Oct 4 high) followed by 598.25 (Oct 3 high).