Australian FOREX Daily Outlook 01/09/2006

CURRENCY TRADING SUMMARY –1 SEPTEMBER06 (05:00GMT)

• U.S. Dollar Trading (USD) was initially weaker against the majors in the overnight forex trading session as the US Core PCE deflator came in less than expected and Personal spending and Income both rose. Core PCE came in at 0.1% compared to an expectation of 0.2%. Personal income came in on expectations at 0.5% and personal spending also came in on expectations at 0.8%. The Chicago PMI came in at 57.1 compared to a forecast of a fall to 57 from 57.9. In other markets, the Dow Jones index fell by 2pts and the NASDAQ also retreated by 2pts. Crude oil rose by US27c to US$70.30 as Iran stated it would not give up its nuclear ambitions. Looking ahead, US non-farm payrolls and the ISM manufacturing index is due out tonight.
  

• The Euro (EUR) traded within a low of 1.2786 and a high of 1.2879, before closing at 1.2814 in the New York session. On the data front, the ECB kept rates steady at 3.0% and ECB President Trichet hinted that interest rates may be hiked soon to curb inflationary pressures. The HICP estimate came in on expectations at 2.3%. Looking ahead, the unemployment rate is due out today.
  

• The Japanese Yen (JPY) traded within a low of 116.92 and a high of 117.48 versus the dollar, before closing at 117.40 in the New York session.
  

• The Sterling (GBP) traded within a low of 1.8995 and a high of 1.9091, before closing at 1.9040 in the New York session. On the data front, GfK consumer confidence came out worse than expected at -8 from a -5 estimate. Looking ahead, PMI manufacturing is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7620 and a high of 0.7645, before closing at 0.7630 in the New York session. On the data front, the current account came in at a deficit of -13.24bln beating forecasts of -13.8bln.
  

• Gold (XAU) strengthened by US$8.10 to US$624.20 an ounce on the back of the UN deadline for Iran being reached, spurring some safe-haven buying of the precious metal.

TECHNICAL COMMENTARY

• Euro 1.2810

Initial support at 1.2723 (Aug 25 low) followed by 1.2695 (Aug 15 low). Initial resistance is now located at 1.288 (Aug 31 high) followed by 1.2941 (Aug 21 high).

• Yen 117.30

Initial support is located at 116.51 (Aug 29 low) followed by 116.09 (Aug 23 low). Initial resistance is now at 117.51 (Aug 31 high) followed by 117.87 (Jul 19 high).

• Pound – 1.9040

Initial support at 1.883 (Aug 25 low) followed by 1.8775 (Aug 18 low). Initial resistance is now at 1.9112 (Aug 9 high) followed by 1.9146 (Aug 8 trend high).

• Australian Dollar – 0.7635

Initial support at 0.7546 (38.2% retracement of the 0.7269 to 0.7717 advance) followed by 0.7489 (Jul 20 low). Initial resistance is now at 0.7673 (Aug 23 high) followed by 0.7702 (Aug 16 high).

• Gold – 627.50

Initial support at 607.67 (Aug 18 low) followed by 602.66 (Jul 24 reaction low). Initial resistance is now at 630.5 (Aug 23 high) followed by 633.1 (Aug 14 high).