Australian FOREX Daily Outlook 01/11/2006

Disappointing economic data from the US causes sharp fall against major currencies. Oil touches 16-month low.

CURRENCY TRADING SUMMARY –1 NOVEMBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) weakened against the majors in the overnight foreign exchange trading session as consumer confidence and the Chicago PMI disappointed. Consumer confidence posted a fall to 105.4 from 105.9 after the market was expecting a rise to 108. The Chicago PMI dropped to 53.5 from an expected fall to 58. In other markets, the Dow Jones index dropped 5pts and the NASDAQ finished up under 3pts as the weak economic data hampered any major gains in equities. Crude oil rose by US34c to US$58.70 a barrel, but not after falling to a 16-month low of US$57.05 as concerns in Nigeria and short coverings helped the price higher. Looking ahead, the ISM manufacturing index and ADP payrolls estimate are due out tonight.
  
• The Euro (EUR) traded within a low of 1.2679 and a high of 1.2783, before closing at 1.2765 in the New York session. On the data front, Eurozone HICP came in at 1.6% less then the 1.7% estimate.
  

• The Japanese Yen (JPY) traded within a low of 116.62 and a high of 118.05 versus the dollar, before closing at 116.92 in the New York session. On the data front, BoJ interest rates were left on hold at 0.25% with BoJ officials commenting that they will raise rates gradually depending on economic data.
  

• The Sterling (GBP) traded within a low of 1.8959 and a high of 1.9100, before closing at 1.9075 in the New York session. Looking ahead, manufacturing PMI is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7674 and a high of 0.7753, before closing at 0.7745 in the New York session. Looking ahead, Aussie trade balance is due out tomorrow as well as retail sales.
  

• Gold (XAU) fell by US60c to US$606.80 an ounce as the initial fall in crude oil weighed heavily on the precious metal.

TECHNICAL COMMENTARY

• Euro 1.2760

Initial support at 1.2662 (Oct 27 low) followed by 1.2597 (Oct 26 low). Initial resistance is now located at 1.2834 (Sep 22 high) followed by 1.288 (Aug 31 high).

• Yen 116.90

Initial support is located at 116.06 (Sep 22 corrective low) followed by 115.56 (Sep 5 corrective low). Initial resistance is now at 118.06 (Oct 31 high) followed by 118.74 (Oct 27 high).

• Pound – 1.9070

Initial support at 1.8952 (Oct 30 low) followed by 1.887 (Oct 27 low). Initial resistance is now at 1.9146 (Aug 8 reaction high) followed by 1.9129 (Apr 20, 2005 high).

• Australian Dollar – 0.7735

Initial support at 0.7671 (Oct 31 low) followed by 0.7623 (Oct 27 low). Initial resistance is now at 0.7795 (May 11 trend high) followed by 0.781 (Jun 21, 2005 reaction high).

• Gold – 605

Initial support at 598.5 (Oct 31 low) followed by 580.05 (Oct 25 low). Initial resistance is now at 610.7 (Oct 30 high) followed by 619.4 (Sep 8 high).