Australian FOREX Daily Outlook 11/04/2006

MARKET SUMMARY –11APRIL06 (05:00GMT)

• The Dollar was range bound against the major currencies overnight in a lackluster session that contained no significant economic news and data. Federal Reserve Governor Susan Bies has watered down expectations about future rate hikes saying: “It’s not a slam-dunk how much further we’re going”. These comments had little impact on the bond and currency markets. In other markets, US shares were mixed with the Dow Jones index up by 21pts while the NASDAQ was lower by 6pts. Crude oil lifted to just below US$69 a barrel overnight as investors fear the Iran and western nation dispute could escalate. Crude oil rose by US$ 1.35 to US$68.74 a barrel. Looking ahead and the data schedule is again a light one in the States. The weekly chain store sales is due and Fed President Stern speaks on effective economic policy at the American Academy in Berlin.
  

• The Euro traded in a range of 1.2076 to 1.2130, before closing at 1.2110 in the New York session. On the data front, French production data came in quite a bit worse than expected, down 0.9% m/m, while manufacturing production was off 0.4%, against expectations for a 1.3% m/m rise.
  
• The Japanese yen traded in a range of 118.02 to 118.71 versus the dollar, before closing at 118.35 in the New York session. The BoJ concludes its two-day board meeting today and while no new policy announcements are likely, BoJ comments will be watched following the meeting. Yesterday, machinery orders data showed orders for February rose by 3.4% m/m (8.2% y/y) – slightly stronger than the 3.2% expectation.
  

• The Sterling traded in a range of 1.7375 to 1.7472, before closing at 1.7435 in the New York session. UK PPI rose at its weakest pace in five months, while factory gate inflation slowed but nothing for interest rate markets in this release. Also in the UK, house prices up 3.6% in the year, Office of Deputy PM reports, a tad slower than the 4.3% annual rate reported the month previously.
  

• The Aussie traded in a range of 0.7271 to 0.7298, before closing near its highs in the New York session.
  
• Gold closed above US$600 an ounce for the first time in 25 years and silver at fresh 23 year highs. Gold rose by US$9.10 an ounce to US$601.80.

TECHNICAL COMMENTARY

• Euro 1.2115

Initial support at 1.2075 (Apr 10 low) followed by 1.2031 (Apr 3 reaction low). Initial resistance is now located at 1.2235 (Apr 7 high) followed by 1.2335 (Apr 6 high).

• Yen 118.40

Initial support is located at 117.26 (Apr 6 low) followed by 116.68 (Apr 5 low). Initial resistance is now at 118.71 (Apr 10 high) followed by 118.82 (Apr 3 high).

• Pound – 1.7440

Initial support at 1.7375 (Apr 10 low) followed by 1.7337 (76.4% retracement of the 1.7250 to 1.7619 advance). Initial resistance is now at 1.7535 (Apr 7 high) followed by 1.7626 (Mar 6 reaction high).

• Aussie – 0.7310

Initial support at 0.7255 (Apr 10 low) followed by 0.7196 (Apr 5 low). Initial resistance is now at 0.7345 (Apr 7 high) followed by 0.7370 (61.8% retracement of the 0.7590 to 0.7015 decline).