Australian FOREX Daily Outlook 16/08/2006

CURRENCY TRADING SUMMARY –16 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) weakened against the majors in the overnight foreign exchange trading session as weaker than expected headline and core PPI figures released in the US pushed the dollar down against the major currencies. Headline PPI for July came in at 0.1% compared to an estimated 0.4%, and the core PPI figure posted a drop of -0.3% compared to the forecast of 0.2%. The market did not react to better than expected capital flow data showing an inflow of 75.1Bln compared to an estimated inflow of 69.9Bln for the month of June. In other markets, both the Dow Jones index and the NASDAQ rallied after the softer than expected PPI figures were released, rising 132pts and 46pts respectively. Crude oil fell again as the truce between Israel and Hezbollah stood for another day, dropping US48c to USD$73.05 a barrel. Looking ahead, CPI figures out of the US together with building permits and industrial production are due for release later today.
  

• The Euro (EUR) traded within a low of 1.2699 and a high of 1.2803, before closing at 1.2788 in the New York session. Looking ahead, Eurozone CPI is due out tomorrow.
  

• The Japanese Yen (JPY) traded within a low of 115.88 and a high of 116.70 versus the dollar, before closing at 116.13 in the New York session. Looking ahead the BoJ minutes for the 13-14 July meeting is due out today.
  

• The Sterling (GBP) traded within a low of 1.8857 and a high of 1.8976, before closing at 1.8937 in the New York session. On the data front, UK CPI came in at -0.1% compared to a 0% change expectation. Looking ahead, the BoE minutes of 2-3 August meeting is due out later today.
  

• The Australian Dollar (AUD) traded within a low of 0.7614 and a high of 0.7654, before closing at 0.7650 in the New York session. On the data front, consumer sentiment came in at 90 compared to a previous result of 107.4.
  
• Gold (XAU) fell by US$6.40 to US$624.80 an ounce on the back of technical selling and a weaker oil price.

TECHNICAL COMMENTARY

• Euro 1.2790

Initial support at 1.2695 (Aug 15 low) followed by 1.2685 (50% ret 1.2456 to 1.2913 and approx Aug 3 low). Initial resistance is now located at 1.283 (61.8% retracement of the 1.2913 to 1.2695 decline) followed by 1.2913 (Aug 10 corrective high).

• Yen 116.00

Initial support is located at 115.69 (38.2% retracement of the 113.97 to 116.76 advance) followed by 115.11 (Aug 11 low). Initial resistance is now at 116.74 (Aug 15 high) followed by 116.96 (76.4% retracement of 117.89 to 113.97 decline).

• Pound – 1.8940

Initial support at 1.8841 (Aug 14 low) followed by 1.8775 (38.2% retracement of the 1.8176 to 1.9146 rally). Initial resistance is now at 1.8961 (Aug 15 high) followed by 1.8992 (Aug 11 high).

• Australian Dollar – 0.7645

Initial support at 0.7565 (Aug 9 low) followed by 0.7546 (38.2% retracement of the 0.7269 to 0.7717 advance). Initial resistance is now at 0.7682 (Aug 14 high) followed by 0.7717 (Aug 10 high).

• Gold – 625

Initial support at 624 (Aug 14 low) followed by 602.57 (Jul 24 low). Initial resistance is now at 645 (Aug 11 high) followed by 656.2 (Aug 2 high).