Australian FOREX Daily Outlook 26/07/2006

CURRENCY TRADING SUMMARY –26JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) gained ground on the majors in the overnight foreign exchange trading session as US existing home sales fell and consumer confidence rose. US existing home sales fell to a 6.62 million annual rate for June, beating forecasts of a drop near to 6.58 million. Consumer confidence surprised the forex market as it rose to 106.5 from 105.4 in July beating forecasts of a fall to 104.0. In other markets, the Dow Jones index made a late rally to finish up 52pts while the NASDAQ gained 12pts. Crude oil prices retreated as the market felt confident that the current conflict within the Middle-East will be contained to Israel and Lebanon. Crude oil lost US$1.30 to US$73.75 a barrel. Looking ahead, the US Beige Book is due out today.

• The Euro (EUR) traded within a low of 1.2565 and a high of 1.2669, before closing at 1.2577 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 116.55 and a high of 117.38 versus the dollar, before closing at 117.24 in the New York session. On the data front, the trade balance came in at a surplus of 807.9bln yen, compared to an estimate of 831bln yen.
  

• The Sterling (GBP) traded within a low of 1.8387 and a high of 1.8535, before closing at 1.8406 in the New York session.

• The Australian Dollar (AUD) traded within a low of 0.7518 and a high of 0.7562, before closing at 0.7525 in the New York session. Looking ahead, CPI numbers are due out today.
  
• Gold (XAU) rose by US$4.80 to US$618.00 an ounce with traders covering short positions after the slide towards US$600.

TECHNICAL COMMENTARY

• Euro 1.2580

Initial support at 1.2553 (61.8% retracement of the 1.2456-1.2711 rally) followed by 1.2456 (Jul 19 corrective low). Initial resistance is now located at 1.2676 (Jul 25 high) followed by 1.2708 (Jul 2 high and 61.8% of the 1.2865 to 1.2456 decline).

• Yen 117.20

Initial support is located at 115.82 (Jul 21 low) followed by 115.67 (50% retracement 113.45 to 117.89 &amp Jul 17 low). Initial resistance is now at 117.89 (Jul 20 corrective high) followed by 118.48 (76.4% retracement of the 121.41 to 108.98 decline).

• Pound – 1.8410

Initial support at 1.8338 (61.8% retracement of the 1.8176-1.8600 rally) followed by 1.822 (Jul 19 corrective low). Initial resistance is now at 1.86 (July 21 high) followed by 1.8669 (61.8% retracement of the 1.9027 to 1.8090 decline).

• Australian Dollar – 0.7530

Initial support at 0.7489 (Jul 20 low) followed by 0.7405 (Jul 19 low). Initial resistance is now at 0.7568 (July 13 reaction high) followed by 0.7594 (61.8% retracement of the 0.7795 to 0.7269 decline).

• Gold – 620

Initial support at 602.66 (Jul 24 low) followed by 597.35 (Jun 30 low). Initial resistance is now at 637.18 (Jul 21 high) followed by 645.5 (Jul 20 high).