Australian FOREX Daily Outlook 26/09/2006

CURRENCY TRADING SUMMARY –26 SEPTEMBER06 (01:30GMT)

• U.S. Dollar Trading (USD) was stronger against the majors in the overnight foreign exchange trading session as US home sales declined less than expected. Existing Home sales were expected to drop to 6.18million for August from 6.33million in July however, the fall was a modest one to 6.3million. Federal Reserve Bank of Dallas President Richard Fisher spoke about inflationary risks, commenting that the elevated level of inflation leaves the Federal Reserve no choice but to remain vigilant. In other markets, the Dow Jones index rose by 68pts while the NASDAQ gained 30pts as end-of-quarter buying spurred rises in stock prices. Crude oil rose by US85c to close at US$60.40 a barrel as short-covering pushed oil back over US$60 a barrel. Looking ahead, US consumer confidence and the Richmond survey are due out tonight.
  
• The Euro (EUR) traded within a low of 1.2733 and a high of 1.2813, before closing at 1.2745 in the New York session. On the data front, the IFO business climate is due out today with the market expecting a level of 104.4 from a previous result of 105.
  

• The Japanese Yen (JPY) traded within a low of 116.15 and a high of 116.73 versus the dollar, before closing at 116.61 in the New York session.

• The Sterling (GBP) traded within a low of 1.8984 and a high of 1.9071, before closing at 1.9004 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7500 and a high of 0.7537, before closing at 0.7535 in the New York session.
  
• Gold (XAU) rose by US$0.10 to US$585.50 an ounce in tight range trading as oil prices initially fell then recovered.

TECHNICAL COMMENTARY

• Euro 1.2745

Initial support at 1.2731 (Sep 25 low) followed by 1.2708 (61.8% retracement of the 1.2630 to 1.2834 advance). Initial resistance is now located at 1.2834 (Sep 22 high) followed by 1.288 (Aug 31 reaction high).

• Yen 116.50

Initial support is located at 115.96 (Sep 6 low) followed by 115.56 (Sep 5 reaction low). Initial resistance is now at 117.49 (Sep 21 low) followed by 117.77 (Sep 20 high).

• Pound – 1.9000

Initial support at 1.892 (Former resistance from Sep 14) followed by 1.8863 (Sep 21 low). Initial resistance is now at 1.9094 (Aug 31 reaction high) followed by 1.9146 (Aug 8 trend high).

• Australian Dollar – 0.7530

Initial support at 0.7482 (Sep 13 low) followed by 0.7442 (61.8% retracement of the 0.7269 to 0.7722 rally). Initial resistance is now at 0.7582 (Sep 21 high) followed by 0.7601 (Sep 8 high and 50% ret 0.7722 to 0.7482 decline).

• Gold – 590

Initial support at 571 (Sep 15 low) followed by 561.0 (Jun 20 low). Initial resistance is now at 592.7 (Sep 22 high) followed by 595.35 (Sep 14 high).