Australian FOREX Daily Outlook 04/10/2006

Major currencies stumble against the greenback as the foreign exchange market readies itself for important data releases to come. Crude oil and gold are sold off.

CURRENCY TRADING SUMMARY –4 OCTOBER06 (01:30GMT)

• U.S. Dollar Trading (USD) strengthened against the majors in the overnight foreign exchange trading session as technical flows dominated the market with relatively no economic data out of the US, and as participants readied themselves for important data due for release. In other markets, the Dow Jones index closed at an all time high, rising by 56pts to 11,727 while the NASDAQ finished the session up 6pts. Crude oil broke under US$60 a barrel, falling US$2.35 to US$58.68 as plentiful supplies and lack of damaging hurricanes in the Gulf of Mexico, ensured that stocks are more than adequate. Looking ahead, the ADP payroll estimate and the ISM non-manufacturing index are due out tonight.
  

• The Euro (EUR) traded within a low of 1.2724 and a high of 1.2764, before closing at 1.2729 in the New York session. On the data front, Eurozone PPI came in at 0.1% for the month of August from an expected 0.2%. Looking ahead, PMI services are due out today.

• The Japanese Yen (JPY) traded within a low of 117.42 and a high of 117.94 versus the dollar, before closing at 117.92 in the New York session.
  

• The Sterling (GBP) traded within a low of 1.8859 and a high of 1.8897, before closing at 1.8876 in the New York session. Looking ahead, PMI services for the UK is due out today.

• The Australian Dollar (AUD) traded within a low of 0.7427 and a high of 0.7485, before closing at 0.7428 in the New York session. On the data front, the RBA decided to leave rates unchanged at 6%.
  
• Gold (XAU) fell by US$21.80 to US$581.50 an ounce as significantly lower oil prices reduced inflation fears in the market.

TECHNICAL COMMENTARY

• Euro 1.2730

Initial support at 1.2639 (Sep 29 reaction low) followed by 1.263 (Sep 15 reaction low). Initial resistance is now located at 1.2769 (Oct 3 high) followed by 1.2834 (Sep 22 reaction high).

• Yen 117.95

Initial support is located at 117.32 (Sep 29 low) followed by 116.89 (Sep 27 low). Initial resistance is now at 118.41 (Oct 2 high) followed by 118.56 (Multi-year key trend line / triangle resistance).

• Pound – 1.8875

Initial support at 1.8633 (Sep 29 low) followed by 1.8601 (Sep 11 low). Initial resistance is now at 1.8907 (61.8% retracement of the 1.9076 to 1.8633 decline) followed by 1.8919 (Sep 28 high).

• Australian Dollar – 0.7430

Initial support at 0.7424 (Oct 2 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7495 (Oct 2 high) followed by 0.7557 (Sep 26 high).

• Gold – 575

Initial support at 574.7 (Oct 2 low) followed by 570.98 (Sep 15 low). Initial resistance is now at 607.01 (Sep 28 high) followed by 614.01 (61.8% retracement of the 640.60 to 571.00 decline).