Australian FOREX Daily Outlook 03/01/2007

Dollar continues its weak tone against majors. Market holiday in Japan and shortened trading session in the US meant thin volumes. ISM manufacturing due out tonight.

CURRENCY TRADING SUMMARY –3 JANUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) continued its slide against the majors in the overnight forex session as thin volume trading was seen due to a market holiday in Japan and a shortened trading session in the US due to the funeral of former President Gerald Ford. In other markets, the US stock market was closed in remembrance of Gerald Ford. Crude oil was down US0.08c to US$60.97 a barrel as mild weather in the US offset existing worries from the nuclear program in Iran. Looking ahead, ISM manufacturing, FOMC minutes, and ADP employment report are due out tonight.

• The Euro (EUR) traded within a low of 1.3200 and a high of 1.3297, before closing at 1.3287 in the New York session. On the data front, PMI manufacturing came in at 56.5 compared to a 56.8 estimate.

• The Japanese Yen (JPY) traded within a low of 118.51 and a high of 119.06 versus the dollar, before closing at 118.82 in the New York session.

• The Sterling (GBP) traded within a low of 1.9600 and a high of 1.9742, before closing at 1.9738 in the New York session. On the data front, PMI manufacturing came in at 51.9 compared to a 52.6 estimate.

• The Australian Dollar (AUD) traded within a low of 0.7906 and a high of 0.7967, before closing at 0.7962 in the New York session.

• Gold (XAU) rose by US$4.50 to US$642.50 an ounce in response to a weaker US dollar.

TECHNICAL COMMENTARY

• Euro 1.3275

Initial support at 1.3198 (Jan 2 low) followed by 1.3089 (Dec 26, 2006 corrective low). Initial resistance is now located at 1.3299 (Jan 2 high) followed by 1.3368 (Dec 4, 2006 trend high).

• Yen 118.85

Initial support is located at 118.22 (Dec 22 low) followed by 117.44 (Dec 15 low). Initial resistance is now at 119.24 (Dec 26 high) followed by 119.67 (Oct 24 corrective high).

• Pound – 1.9735

Initial support at 1.9589 (Jan 2 low) followed by 1.9516 (Dec 26, 2006 corrective low). Initial resistance is now at 1.9751 (Dec 20, 2006 corrective high) followed by 1.9849 (Dec 1, 2006 trend high).

• Australian Dollar – 0.7960

Initial support at 0.7886 (Jan 2 low) followed by 0.7808 (Dec 27, 2006 corrective low). Initial resistance is now at 0.799 (Mar 8, 2005 reaction high) followed by 0.8005 (Feb 18, 2005 reaction high).

• Gold – 640

Initial support at 636.5 (Jan 2 low) followed by 632.3 (Dec 29, 2006 low). Initial resistance is now at 645.5 (Key trend-line resistance) followed by 650.2 (Dec 1, 2006 reaction high).