Australian FOREX Daily Outlook 09/10/2006

Non-Farm Payrolls disappoints coming in less than expected. US Dollar rallies despite poor number.

CURRENCY TRADING SUMMARY –9 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) strengthened against the majors in the overnight foreign exchange trading session as Non-Farm Payrolls (NFP) came in much less than expected. NFP came in at just 51k for the month of September compared to an expectation of 125k. However, there was an upward revision of the August result by 60k and the yearly to March 2006 by 810k. Unemployment improved from 4.7% to 4.6% as a result. In other markets, the Dow Jones index fell by 16pts and the NASDAQ fell by 6pts as the economic data released was generally in line with expectations. Crude oil fell by US27c to end at US$59.76 a barrel as the market waited to see if OPEC would put plans into place to cut production by 1million barrels a day. Looking ahead, the US enjoys Columbus day holiday.
  

• The Euro (EUR) traded within a low of 1.2576 and a high of 1.2716, before closing at 1.2601 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 117.66 and a high of 119.09 versus the dollar, before closing at 118.88 in the New York session. On the data front, North Korea has mentioned they are likely to test a nuclear weapon in the coming days. Looking ahead, private machinery orders are due out tomorrow.

  There are unconfirmed reports that North Korea successfully tested a nuclear weapon today.
  

• The Sterling (GBP) traded within a low of 1.8676 and a high of 1.8880, before closing at 1.8711 in the New York session. Looking ahead, PPI is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7416 and a high of 0.7480, before closing at 0.7431 in the New York session.

• Gold (XAU) strengthened by US$1.30 to US$574.70 an ounce as speculators bought the precious metal, squaring up short positions.

TECHNICAL COMMENTARY

• Euro 1.2590

Initial support at 1.257 (76.4% retracement of the 1.2456 to 1.2941 advance) followed by 1.2559 (Jul 26 low). Initial resistance is now located at 1.271 (Oct 6 high) followed by 1.2769 (Oct 3 high).

• Yen 118.90

Initial support is located at 117.32 (Sep 29 low) followed by 116.89 (Sep 27 low). Initial resistance is now at 119.41 (Feb 3 reaction high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8700

Initial support at 1.8673 (Oct 6 low) followed by 1.8601 (Sep 11 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 – 0.7425

Initial support at 0.7414 (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 – 577

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).