Australian FOREX Daily Outlook 02/11/2006

US ISM manufacturing and construction spending disappoint. Market ignores stronger ADP employment number. Gold surges above key level.

CURRENCY TRADING SUMMARY –2 NOVEMBER 06 (23:30GMT)

• U.S. Dollar Trading (USD) softened against the majors in the overnight foreign exchange trading session as data releases were anything but strongly positive for the greenback. The US ISM manufacturing index was expected to post a level of 53.0 slightly higher than the previous level of 52.9 instead it came in at 51.2. Construction spending also fell to-0.3% from a 0% estimate. The only positive for the USD was the ADP employment report which came in at 128k, beating forecasts of 103k. In other markets, the Dow Jones index gave up 49pts and the NASDAQ fell 32pts as investors worried about further economic slowdown. Crude oil fell by US19c to US$58.54 a barrel as traders feared a slowdown in the US economy will cause a drop in demand for crude. Looking ahead, productivity and unit labour costs are due out tonight.
  

• The Euro (EUR) traded within a low of 1.2743 and a high of 1.2799, before closing at 1.2761 in the New York session. Looking ahead, manufacturing PMI and the ECB interest rate announcement are due out today.
  

• The Japanese Yen (JPY) traded within a low of 116.57 and a high of 117.17 versus the dollar, before closing at 117.03 in the New York session.
  

• The Sterling (GBP) traded within a low of 1.9056 and a high of 1.9137, before closing at 1.9088 in the New York session. On the data front, PMI manufacturing came in at 53.7 slightly less than the expected 54 level.
  

• The Australian Dollar (AUD) traded within a low of 0.7732 and a high of 0.7766, before closing at 0.7751 in the New York session. Looking ahead, Aussie trade balance is due out today as well as retail sales.
  

• Gold (XAU) strengthened by US$12.30 to US$619.10 an ounce through resistance at $610, as traders fear a slowdown in the US economy will mean interest rate cuts and a weaker US dollar.

TECHNICAL COMMENTARY

• Euro 1.2760

Initial support at 1.2677 (Oct 31 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 117.05

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 – 1.9085

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 – 0.7750

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 – 616

Initial support at 598.5 (Oct 31 low) followed by 580.05 (Oct 25 low). Initial resistance is now at 619.8 (Nov 1 high) followed by 640.6 (Sep 6 high).