Australian FOREX Daily Outlook 12/07/2006

CURRENCY TRADING SUMMARY –12JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) remained relatively stable against the majors in the overnight foreign exchange trading session as the forex market eagerly awaits the decision of the Bank of Japan this Friday with regards to interest rates. Japanese Finance Minister Sadakazu Tanigaki reiterated that the government viewed the zero interest rate policy as desirable. In other markets, the Dow Jones index finished higher by 31pts together with the NASDAQ which finished stronger, up 12pts. Crude oil rose overnight following Iranian refusal to halt its uranium enrichment program. Crude oil finished US55c higher a barrel to US$74.16. Looking ahead, the US international trade balance is due out today.
  

• The Euro (EUR) traded in a range of 1.2708 to 1.2774, before closing at 1.2774 in the New York session. Looking ahead, GDP numbers are due out today for the Eurozone.
  

• The Japanese Yen (JPY) traded in a range of 113.94 to 114.67 versus the dollar, before closing at 114.25 in the New York session. On the data front, Japanese consumer confidence for June dropped to 46.2 from 49.8 the month before. CGPI for June came in higher than expected at 0.1% compared to an estimate of 0%, whereas the year on year stayed steady at 3.3% beating estimates of a rise to 3.4%.
  

• The Sterling (GBP) traded in a range of 1.8368 to 1.8447, before closing at 1.8447 in the New York session. On the data front, the trade balance came in worse than expected at -6.75Bln for May compared to an estimate of -5.7Bln and a previous month result of a revised -5.57Bln. Looking ahead, the unemployment rate is due out today.
  

• The Australian Dollar (AUD) traded in a range of 0.7490 to 0.7530, before closing at 0.7523 in the New York session.
  
• Gold (XAU) strengthened by US$17.00 to US$643.10 an ounce after the bombings in India caused a surge in buying of the yellow metal. Nickel hit fresh highs, and copper recovered somewhat with threats to supply and low stock levels helping the base metal market.

TECHNICAL COMMENTARY

• Euro 1.2760

Initial support at 1.2704 (Jul 11 low) followed by 1.2655 (Jun 30 low). Initial resistance is now located at 1.2865 (July 7 high and 76.4% of the 1.2980 to 1.2478 decline) followed by 1.2935 (Jun 6 high).

• Yen 114.30

Initial support is located at 113.45 (July 10 low) followed by 112.85 (50% retracement of the 108.98 to 116.72 advance). Initial resistance is now at 115.31 (Jul 7 high) followed by 115.8 (Jul 5 high).

• Pound – 1.8445

Initial support at 1.8326 (Jul 7 low) followed by 1.8295 (50% retracement of the 1.8090 to 1.8500 advance). Initial resistance is now at 1.8541 (July 7 high) followed by 1.8559 (50% retracement of the 1.9027 to 1.8090 decline).

• Australian Dollar – 0.7520

Initial support at 0.746 (Jul 11 low) 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).