Australian FOREX Daily Outlook 07/11/2006

Greenback up against major currencies as Federal Reserve members speak. Crude rises above US$60 a barrel.

CURRENCY TRADING SUMMARY –7 NOVEMBER 06 (23:30GMT)

• U.S. Dollar Trading (USD) strengthened against the majors in the overnight forex session as Federal Reserve members downplay recent negative economic data from the US. Former Fed Reserve Chairman Alan Greenspan agreed the US housing market will soften further, however the biggest decline is over. Chicago Fed Reserve President Michael Moskow commented that core inflation was too high but that it is starting to come down gradually. In other markets, the Dow Jones index finished higher by 119pts and the NASDAQ climbed 35pts as a host of corporate transactions dominated proceedings. Crude oil rose again by US96c to US$60.10 a barrel as the Saudi Arabian oil minister said OPEC was ready to cut production again in December if warranted. Looking ahead, the US legislative election is finalized tonight.
  

• The Euro (EUR) traded within a low of 1.2691 and a high of 1.2726, before closing at 1.2722 in the New York session. On the data front, German industrial orders fell to -2.5% from a -0.8% estimate. Looking ahead, Eurozone retail sales are due out today.
  

• The Japanese Yen (JPY) traded within a low of 117.79 and a high of 118.46 versus the dollar, before closing at 118.27 in the New York session.

• The Sterling (GBP) traded within a low of 1.8949 and a high of 1.9034, before closing at 1.8971 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7672 and a high of 0.7717, before closing at 0.7716 in the New York session. On the data front, the RBA begin their 2-day meeting today to decide on any changes to interest rates. Looking ahead, Australia stops at AEDST 15:00 (04:00 GMT) for the Melbourne Cup today with forecasts centering on a win by Tawqeet versus a previous cup result of Makybe Diva.
  

• Gold (XAU) fell by US$1.30 to US$627.90 an ounce in quiet trading.

TECHNICAL COMMENTARY

• Euro 1.2730

Initial support at 1.2677 (Oct 31 low) followed by 1.2662 (Oct 27 low). Initial resistance is now located at 1.28 (Nov 1 high) followed by 1.2834 (Sep 22 high).

• Yen 118.20

Initial support is located at 116.97 (Nov 3 low) followed by 116.57 (Nov 1 low). Initial resistance is now at 118.18 (Nov 3 high) followed by 118.74 (Oct 27 high).

• Pound – 1.8980

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 – 0.7715

Initial support at 0.7671 (Oct 31 low) followed by 0.7623 (Oct 27 low). Initial resistance is now at 0.7769 (Nov 1 high) followed by 0.7795 (May 11 trend high).

• Gold – 623

Initial support at 614.55 (Nov 2 low) followed by 598.5 (Oct 31 low). Initial resistance is now at 629.5 (Nov 3 high) followed by 640.6 (Sep 6 high).