Australian FOREX Daily Outlook 24/10/2006

USD strengthens considerably against the majors as the forex market awaits the FOMC interest rate decision tomorrow.

CURRENCY TRADING SUMMARY –24 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) rallied against the majors in the overnight foreign exchange trading session as the absence of any economic data from the US meant technical trading dominated the markets. Traders adjusted positions ahead of the interest rate policy decision by the Federal Reserve, with many participants waiting to hear what Chairman Bernanke has to say about the state of the economy and inflationary pressures. In other markets, the Dow Jones index rose by 115pts to a new all-time high, and the NASDAQ managed to add 13pts as strong corporate earnings helped boost the major indices. Crude oil fell by US52c to US$59.33 a barrel as the market awaits to see if oil-producing nations follow Saudi Arabia in advising clients of proposed production cuts. Looking ahead, the Richmond Fed Survey is due out today.
  

• The Euro (EUR) traded within a low of 1.2537 and a high of 1.2621, before closing at 1.2551 in the New York session. Looking ahead, industrial orders are due out today.
  

• The Japanese Yen (JPY) traded within a low of 118.57 and a high of 119.38 versus the dollar, before closing at 119.28 in the New York session.

• The Sterling (GBP) traded within a low of 1.8686 and a high of 1.8835, before closing at 1.8738 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7568 and a high of 0.7614, before closing at 0.7569 in the New York session. Looking ahead, Australian CPI is due out tomorrow.
  

• Gold (XAU) fell sharply by US$15.10 to US$581.95 an ounce, weighed down by a stronger USD and a weaker oil price.

TECHNICAL COMMENTARY

• Euro 1.2545

Initial support at 1.2527 (Oct 19 low) followed by 1.2483 (Oct 16 low). Initial resistance is now located at 1.2644 (Oct 19 high) followed by 1.27 (61.8% retracement of the 1.2834 to 1.2483 decline).

• Yen 119.35

Initial support is located at 118.56 (Oct 23 low) followed by 118.04 (Oct 19 low). Initial resistance is now at 119.9 (Oct 13 trend high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8725

Initial support at 1.8663 (Oct 18 low) followed by 1.8649 (61.8% retracement of the 1.8516 to 1.8863 advance). Initial resistance is now at 1.8863 (Oct 20 high) followed by 1.8904 (Oct 3 high).

• Australian Dollar – 0.7570

Initial support at 0.7524 (Oct 17 low) followed by 0.7489 (Oct 13 low). Initial resistance is now at 0.7617 (Oct 23 high) followed by 0.7649 (76.4% retracement of the 0.7722 to 0.7414 decline).

• Gold – 582

Initial support at 586.1 (Oct 17 low) followed by 577.4 (Oct 13 low). Initial resistance is now at 602.6 (Oct 20 high) followed by 607.01 (Sep 28 high).