Australian FOREX Daily Outlook 24/05/2006

MARKET SUMMARY –24MAY06 (05:00GMT)

• The Dollar did not move significantly during the market however it did strengthen against the major currencies towards the end of day’s trading on the back of comments by Federal Reserve chairman Bernanke saying that interest rates may be increased after the FOMC meeting in late June. On the data front, new homes sales are due out today, with GDP and existing home sales due out tomorrow. In other markets, worldwide sharemarkets rebounded strongly with the UK FTSE having its biggest one day gain in 3 years and the Russian sharemarket rising 10.7%. The US sharemarkets again remained relatively untouched with the Dow Jones index initially rising 77pts but finishing 27pts down and the NASDAQ falling 14pts. Crude oil rose from the day before ending at US$71.76, up US$1.80 a barrel.

• The Euro traded in a range of 1.2806 to 1.2879 before closing at 1.2815 during the New York session. On the data front, the French INSEE survey showed a lack of confidence for the first time in a year, however, consumer spending was better than expected rising 0.7% in April.

• The Japanese yen traded in a range of 111.28 to 112.93 versus the dollar, before closing at 111.57 in the New York session. On the data front, S&amp P raised Japan’s debt outlook from stable to positive. The March tertiary sector index came in at -0.6% and the All Industry at -0.4%, both a little higher than forecasters expected.

• The Sterling traded in a range of 1.8775 to 1.8885, before closing at 1.8788 in the New York session. On the data front, GDP figures are out tomorrow.

• The Aussie traded in a range of 0.7503 to 0.7594, before closing at 0.7520 in the New York session. On the data front, house prices are due out tomorrow.

• Gold remained relatively strong overnight in a trading session marked by high volatility across the metals markets. Copper had its biggest one day gain ever, rising almost 11% with nickel and zinc both rising more than 6%. Gold ended the session at US$673.70 up US$16.