Australian FOREX Daily Outlook 07/12/2006

Currencies consolidate ahead of key central bank interest rate announcements. ADP payrolls surprises on the upside.

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

• U.S. Dollar Trading (USD) was stronger against the majors in the overnight forex trading session as ADP payroll numbers came in higher than expected, prompting market participants to question whether the estimated number of non-farm payrolls due out on Friday is too low. In other markets, the Dow Jones index dropped 22pts and the NASDAQ lost 6pts as concerns about the financial outlook for software companies weighed on investors. Crude oil fell by US15c to US$62.28 a barrel as prices were relatively steady throughout the session. Looking ahead, initial jobless claims are due out tonight.
  

• The Euro (EUR) traded within a low of 1.3256 and a high of 1.3340, before closing at 1.3283 in the New York session. Looking ahead, the ECB interest rate announcement and press conference is due out tomorrow with the market expecting the ECB to hike rates by 25 basis points.
  

• The Japanese Yen (JPY) traded within a low of 114.54 and a high of 115.29 versus the dollar, before closing at 115.20 in the New York session. Looking ahead, GDP is due out tomorrow.
  

• The Sterling (GBP) traded within a low of 1.9619 and a high of 1.9737, before closing at 1.9652 in the New York session. On the data front, industrial production came in softer at -0.8% compared to a forecasted 0.1%. Looking ahead, the BoE interest rate announcement is due out today with markets expecting rates to stay on hold at 5.0%
  

• The Australian Dollar (AUD) traded within a low of 0.7848 and a high of 0.7888, before closing at 0.7851 in the New York session. Looking ahead, Aussie GDP is due out today.
  

• Gold (XAU) fell by US$13.90 an ounce to US$634.00 an ounce in response to a firmer greenback and profit-taking.

TECHNICAL COMMENTARY

• Euro 1.3280

Initial support at 1.3219 (Dec 1 reaction low) followed by 1.3132 (Nov 29 reaction low). Initial resistance is now located at 1.3368 (Dec 4 high) followed by 1.344 (Mar 16, 2005 high).

• Yen 115.30

Initial support is located at 114.43 (Dec 5 low) followed by 113.97 (Aug 4 low). Initial resistance is now at 116.57 (Nov 30 reaction high) followed by 117.12 (Nov 13 high).

• Pound – 1.9655

Initial support at 1.9462 (38.2% retracement of the 1.8835-1.9849 rally) followed by 1.9434 (Nov 29 reaction low). Initial resistance is now at 1.9849 (Dec 1 high) followed by 1.9912 (1.618 projection of 1.8516-1.9182 from 1.8835).

• Australian Dollar – 0.7840

Initial support at 0.7817 (Nov 29 low) followed by 0.7762 (Nov 27 low). Initial resistance is now at 0.7927 (Dec 1 high) followed by 0.799 (Mar 8, 2005 high).

• Gold – 630

Initial support at 628.59 (Dec 6 low) followed by 615.0 (Nov 17 reaction low). Initial resistance is now at 650.2 (Dec 1 high) followed by 656.2 (Aug 2 high).