Australian FOREX Daily Outlook 21/06/2006

MARKET SUMMARY –21JUNE06 (05:00GMT)

• The Dollar initially rose then retreated in the overnight session as better than expected housing starts failed to keep the dollar strengthened against the major currencies. US housing starts rose to 1.957 million in May from 1.863 million the month before, beating estimates of a rise to 1.876 million. Building permits however did not fare as well as housing starts, falling to 1,932k from 1,973k when the market was expecting a modest fall to 1,950k. Adding to US weakness were comments from the Governor of the Bank of Japan Toshihiko Fukui who stated that the BoJ should “implement policy steps without delay”, leaving the market to interpret that the zero interest rate policy of Japan will end sooner rather than later. In other markets, the Dow Jones rose by 32pts but the NASDAQ gave up 3pts. Crude oil prices remained relatively unchanged as the nuclear dispute between Iran and Western nations continued to dominate the market psyche. Oil fell US4c to US$68.94 a barrel.
  

• The Euro traded in a range of 1.2539 to 1.2617, before closing at 1.2579 in the New York session.
  

• The Japanese yen traded in a range of 114.63 to 115.63 versus the dollar, before closing at 114.96 in the New York session. Looking ahead, the trade balance is due out tomorrow.
  

• The Sterling traded in a range of 1.8370 to 1.8458, before closing at 1.8424 in the New York session. Looking ahead, the minutes of the BoE June meeting are due out today.
  

• The Aussie traded in a range of 0.7366 to 0.7403, before closing at 0.7379 in the New York session.

• Gold rose by US$8.10 to US$580.50 an ounce, buoyed by buyers seeking a safe-haven amidst the situation between North Korea and Japan and the testing of a long range missile by the North Koreans.

Initial support at 0.7345 (June 14 low) followed by 0.7313 (61.8% retracement of 0.7015 to 0.7795 advance). Initial resistance is now at 0.745 (June 16 high) followed by 0.7505 (June 9 corrective high).