Australian FOREX Daily Outlook 12/10/2006

US Federal Reserve hawkish comments sparks US dollar rally. New RBA Governor Glenn Stevens also hawkish Australian Dollar.

CURRENCY TRADING SUMMARY –12 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) rose against the major currencies in the overnight foreign exchange session as the FOMC minutes from the September 20^th Federal Reserve meeting showed that members were quite concerned about the inflation risk. In other markets, the Dow Jones index finished lower by 15pts while the NASDAQ fell by 7pts as news of a small plane hitting a New York apartment building was dismissed as a terrorist attack instead, it was a tragic accident. Crude oil finished lower by US93c to end at US$57.67 a barrel as a formal agreement was lacking with respect to proposed OPEC production cuts. Looking ahead, the US trade balance and Beige book is due out tonight.
  

• The Euro (EUR) traded within a low of 1.2512 and a high of 1.2556, before closing at 1.2518 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 118.37 and a high of 119.78 versus the dollar, before closing at 119.73 in the New York session. On the data front, current account came in at a 1477bln yen surplus compared to 1440bln yen. Trade balance came in at 312.4bln yen compared to an estimated 217bln yen. Looking ahead, BoJ meet tomorrow to announce a decision on interest rates.
  

• The Sterling (GBP) traded within a low of 1.8520 and a high of 1.8588, before closing at 1.8533 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7423 and a high of 0.7460, before closing at 0.7426 in the New York session. RBA Governor Stevens noted the importance of seeing off inflation to bring inflation under control. On the data front, unemployment came in at 4.8% beating expectations of 4.9%.
  

• Gold (XAU) rose by US30c to US$576.50 an ounce as a result of tight physical supplies.

TECHNICAL COMMENTARY

• Euro 1.2520

Initial support at 1.2502 (Oct 10 low) followed by 1.2456 (Jul 19 reaction low and key support). Initial resistance is now located at 1.2615 (Oct 9 high) followed by 1.271 (Oct 6 high).

• Yen 119.65

Initial support is located at 118.82 (Oct 9 low) followed by 117.32 (Sep 2 low). Initial resistance is now at 119.85 (Oct 11 high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8555

Initial support at 1.8493 (61.8% retracement of the 1.8090 to 1.9146 advance) followed by 1.8385 (Jul 25 low). Initial resistance is now at 1.8715 (Oct 10 high) followed by 1.888 (Oct 6 high).

• Australian Dollar – 0.7445

Initial support at 0.7414 (Oct 4 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7495 (Oct 2 high) followed by 0.7557 (Sep 26 high).

• Gold – 573

Initial support at 560.13 (Oct 4 low) followed by 554.4 (Jun 15 low). Initial resistance is now at 581.2 (Oct 10 high) followed by 598.25 (Oct 3 high).