Australian FOREX Daily Outlook 17/10/2006

US Dollar weakens in the face of strong manufacturing index data. Yen strengthens after comments from Russia. Gold nearing USD$600.

CURRENCY TRADING SUMMARY –17 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) was lower against the majors in the overnight foreign exchange trading session as the New York Federal Reserve Empire State manufacturing index came in above expectations. The survey posted a rise from 13.84 to 22.92 for October where the market was looking for 11.50. St Louis Federal Reserve President William Poole noted that the Fed must be vigilant on inflation. In other markets, the Dow Jones index rose by 20pts while the NASDAQ climbed 6pts as the Dow Jones closes in on the 12,000 level. Crude oil rose by US$1.37 a barrel to US$59.94 as OPEC ministers meet this Thursday to discuss cuts in oil production. Looking ahead, PPI and industrial production are due out tonight.
  

• The Euro (EUR) traded within a low of 1.2492 and a high of 1.2535, before closing at 1.2529 in the New York session. Looking ahead, industrial production and HICP figures are due out today as well as the German ZEW survey.
  

• The Japanese Yen (JPY) traded within a low of 119.04 and a high of 119.77 versus the dollar, before closing at 119.11 in the New York session. On the data front, the tertiary index came in less than the expected level of 0.9% at 0.7%. The Russian central bank announced that they planned to increase the percentage of Yen in their fx reserves.
  

• The Sterling (GBP) traded within a low of 1.8526 and a high of 1.8647, before closing at 1.8605 in the New York session. Looking ahead, UK CPI is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7495 and a high of 0.7548, before closing at 0.7540 in the New York session.
  

• Gold (XAU) rose by US$5.80 to US$598.50 an ounce on the back of higher oil prices.

TECHNICAL COMMENTARY

• Euro 1.2535

Initial support at 1.2483 (Oct 13 low) followed by 1.2456 (Jul 19 reaction low and key support). Initial resistance is now located at 1.2615 (Oct 9 high) followed by 1.271 (Oct 6 high).

• Yen 119.05

Initial support is located at 118.82 (Oct 9 low) followed by 117.32 (Sep 2 low). Initial resistance is now at 119.9 (Oct 13 high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8620

Initial support at 1.8493 (61.8% retracement of the 1.8090 to 1.9146 advance) followed by 1.8385 (Jul 25 low). Initial resistance is now at 1.8664 (38.2% retracement of the 1.8904 to 1.8516 decline) followed by 1.8715 (Oct 10 high).

• Australian Dollar – 0.7535

Initial support at 0.7414 (Oct 4 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7557 (Sep 26 high) followed by 0.7582 (Sep 21 high).

• Gold – 597

Initial support at 577.4 (Oct 13 low) followed by 569.35 (Oct 10 low). Initial resistance is now at 596.3 (Oct 16 high) followed by 598.25 (Oct 3 high).