Australian FOREX Daily Outlook 08/05/2006

MARKET SUMMARY –08MAY06 (05:00GMT)

• The Dollar continued to fall against the major currencies on Friday following worse than expected US non-farm payroll data. US non-farm payrolls rose by 138,000 in April, short of expectations centered on a rise of 200,000 jobs. Average hourly earnings rose by 0.5% and the unemployment was unchanged at 4.7%. In particular, the Dollar fell sharply versus Japanese yen when Under-Secretary Adams said that Japan should not intervene and markets should set the value of the currency. In other markets, US shares posted solid gain with the Dow Jones index up 138pts and the NASDAQ rose by 18pts. Crude oil rose by US25c to US$70.19 a barrel.
  

• The Euro traded in a range of 1.2674 to 1.2765, before closing at 1.2730 in the New York session. Overnight ECB’s Weber said “all options are always open” when asked about a potential 50 point rate move. This caused Euro to rally above 1.2700.
  

• The Japanese yen was the big mover on Friday as it soared from JPY114.01 per US dollar to JPY112.25, before closing at JPY112.55 in the New York session. The market took the opinion that the US treasury is not happy with Japanese Finance minister Tanigaki saying that the market misinterpreted the G7 statement. The Japanese yen continued its climb versus the dollar and key crosses in the Asian session.
  
• The Sterling rallied from 1.8474 to a high of 1.8624, before closing at 1.8590 in the New York session.

• The Aussie traded in a range of 0.7680 to 0.7745, before closing at 0.7725 in the New York session. In Australia today, March retail sales released on Monday rose 0.3 percent, seasonally adjusted, and compared with forecasts that had centered on a 0.4 percent increase.
  
• Gold soared to fresh 25-year highs, supported by the weaker greenback. Gold rose by US$7.80 an ounce to US$684.30.

TECHNICAL COMMENTARY

• Euro 1.2730

Initial support at 1.2571 (May 4 low) followed by 1.2555 (May 1 low). Initial resistance is now located at 1.2766 (May 5 high) followed by 1.2889 (50% retracement of the 1.3663 – 1.1638 decline).

• Yen 111.65

Initial support is located at 111.54 (50% retracement of the 101.67 to 121.41 advance) followed by 110.00 (Psychological support). Initial resistance is now at 114.18 (May 4 corrective high) followed by 114.49 (Apr 28 high).

• Pound – 1.8610

Initial support at 1.8474 (May 5 low) followed by 1.8335 (May 4 corrective low). Initial resistance is now at 1.8706 (Mar 28, 2005 low) followed by 1.8960 (76.4% retracement of the 1.9551 to 1.7048 decline).

• Aussie – 0.7710

Initial support at 0.7651 (May 4 reaction low) followed by 0.7600 (May 3 low). Initial resistance is now at 0.7744 (May 5 high) followed by 0.7760(76.4% retracement of the 0.7990 to 0.7015 decline).