Australian FOREX Daily Outlook 11/07/2006

CURRENCY TRADING SUMMARY –11JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) weakened initially against the majors, however made a late rally in the overnight forex trading session, pairing back losses from the soft payroll data released last week. Covering of short term short positions were seen as the catalyst for the Dollar recovery, as the market awaits data from the US later this week and the BoJ announcement on Friday. In other markets, the Dow Jones index rose by 13pts while the NASDAQ softened by 13pts in the overnight session. Crude oil finished lower after the European Union raised hopes of a positive outcome with talks this week with Iran over its nuclear program. Crude oil fell by US48c a barrel to US$73.61.
  

• The Euro (EUR) traded in a range of 1.2722 to 1.2817, before closing at 1.2730 in the New York session.
  

• The Japanese Yen (JPY) traded in a range of 113.46 to 114.26 versus the dollar, before closing at 114.26 in the New York session. Looking ahead, Japanese consumer confidence is due out today.
  

• The Sterling (GBP) traded in a range of 1.8369 to 1.8522, before closing at 1.8422 in the New York session. On the data front, UK PPI output Year on Year came in at 3.3% compared to the revised May result of 3.1% and a market expectation of 3.2%. Looking ahead, the visible trade balance is due out today.
  

• The Australian Dollar (AUD) traded in a range of 0.7465 to 0.7510, before closing at 0.7475 in the New York session.
  

• Gold (XAU) fell by US$8.70 to US$626.10 an ounce with weaker oil prices and an easing in geopolitical tensions helping to weaken the precious metal.

Initial support at 0.7465 (Jul 10 low and small trend line) followed by 0.7399 (Jul 5 low). Initial resistance is now at 0.7534 (July 10 high and 50% of 0.7795 to 0.7269 decline) followed by 0.7547 (Jun 5 corrective high).