Australian FOREX Daily Outlook 23/03/2006

MARKET SUMMARY –23MAR06 (05:00GMT)

• The Dollar was mixed against the major currencies overnight, with no market-moving events or data to provide direction. The Chicago Federal Reserve reported that its National Activity index rose from +0.28 to +0.32 in February. Any reading above zero indicates that economic growth is above its longer-term trend. In other markets, US shares rallied with the Dow Jones closing up 81pts while the NASDAQ was up by 3 pts. Crude oil prices fell overnight as investors shrugged off a surprise weekly decline in US inventories. Crude oil fell by US57c to US$61.77 a barrel.
  

• The Euro traded in a range of 1.2065 to 1.2108, before closing at 1.2080 in the New York session. On the data front, Eurozone industrial orders were down 5.9% in January but this headline number can be misleading. Get rid of volatility in heavy transport machinery, new orders would have grown 0.2% on the month. Italian Consumer Confidence falls slightly to 109.2, just under forecasts, with individuals scaling back optimism about personal finance levels.
  
• The Japanese yen traded in a range of 116.58 to 117.30 versus the dollar, before closing at 117.00 in the New York session. In Japan yesterday, BoJ Governor Fukui delivered comments yesterday to a parliamentary committee consistent with trying to keep long-term bond yields stable. He said that the BoJ has no plan to end its purchases of JGBs in the future, and continue to do so for now, even once the current account balances have been drained back to normal levels. In Japan today, the trade balance returned to a surplus in February due to strong exports, after high oil prices and the effect of Lunar New Year holidays had produced a deficit a month earlier. The balance rose to a surplus of 955.7 billion yen from a deficit of 351.0 billion yen in January.Exports rose 20.8 percent from a year earlier to 5.8526 trillion yen while imports rose 30.2 percent to 4.8969 trillion yen.

• The Sterling traded in a range of 1.7452 to 1.7508, before closing at 1.7475 in the New York session. In the UK yesterday, the minutes to the March MPC meeting showed an 8 to 1 vote for steady policy, with Stephen Nickell the odd man out voting for an easing once again. This was in line with expectations.
  
• The Aussie traded in a range of 0.7154 to 0.7207, before closing at .7190 in the New York session.

TECHNICAL COMMENTARY

• Euro 1.2060

Initial support at 1.2033 (Mar 16 low &amp 50% retracement of the 1.1859 to 1.2209 advance) followed by 1.1993 (61.8% retracement of 1.1859 to 1.2209 advance). Initial resistance is now located at 1.2166 (Mar 21 high) followed by 1.2209 (Mar 17 high).

• Yen 117.00

Initial support is located at 116.24 (March 21 low) followed by 115.50 (Mar 20 low). Initial resistance is now at 117.79 (61.8% retracement of the 119.21 to 115.50 decline) followed by 117.90 (Mar 16 reaction high).

• Pound – 1.7440

Initial support at 1.7416 (Mar 15 low) followed by 1.7327 (Mar 14 low). Initial resistance is now at 1.7563 (Mar 21 high) followed by 1.7626 (Mar 6 reaction high).

• Aussie – 0.7180

Initial support at 0.7147 (Mar 21 low) followed by 0.7060 (76.4% retracement of the 0.6773 to 0.7990 advance). Initial resistance at 0.7220 (Mar 21 high) followed by 0.7285 (Mar 20 high).