Australian FOREX Daily Outlook 22/05/2006

MARKET SUMMARY –22MAY06 (05:00GMT)

• The Dollar rose against the major currencies on Friday with investors exiting the stock and commodities markets, and buying into US treasuries. In other markets, US stocks recovered some lost ground, sparked by a rebound in technology stocks adding to the fall in commodity-dependent stocks. The Dow Jones index showed a rise of 15 points and the NASDAQ rose by 13 points. Crude oil fell by 92c to US$68.53 a barrel.

• The Euro traded in a range of 1.2873 to 1.2694 before closing at 1.2775 during the New York session. On the data front, French GDP was reported up 0.5%, slightly below estimates of 0.6%. ECB board member Liebscher continued to sound quite hawkish, noting concerns about the risks of increased inflation.
  

• The Japanese yen traded in a range of 110.44 to 112.23 versus the dollar, before closing at 111.70 in the New York session.

• The Sterling traded in a range of 1.8701 to 1.8956, before closing at 1.8775 in the New York session.

• The Aussie traded in a range of 0.7524 to 0.7636, before closing at 0.7565 in the New York session. On the data front, new motor vehicle sales are due out today.

• Gold fell significantly losing US$23.40 to US$657.50. This fall was seen across base metal and precious metal markets, with copper falling by 6.8%, silver and palladium falling 1.3% and 6% respectively.

Initial support at 0.7497 (38.2% retracement of the 0.7015 to 0.7795 advance) followed by 0.7405 (50% retracement of the 0.7015). Initial resistance is now at 0.7658 (May 19 high) followed by 0.7727 (May 17 high).