Australian FOREX Daily Outlook 27/07/2006

CURRENCY TRADING SUMMARY –27JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) extended its losses against the majors in the overnight forex trading session after the release of the US Federal Reserve Beige Book, reinforcing the view that the economy is slowing and that US interest rates may be at their peak. The Beige Book noted that some regions were reporting some slowing economic growth, although there were modest rises in both wages and prices. In other markets, the Dow Jones index finished lower by 1pt whereas the NASDAQ lost 3pts. Crude oil rose by US19c to US$73.94 a barrel after a larger than expected fall in US gasoline stocks and the on-going conflict in the Middle East. Looking ahead, durable goods orders are out today as well as initial jobless claims and new home sales.
  

• The Euro (EUR) traded within a low of 1.2562 and a high of 1.2709, before closing at 1.2705 in the New York session. On the data front, the German IFO index fell from 106.8 to 105.6 in June beating estimates of a fall to only 106.0.
  

• The Japanese Yen (JPY) traded within a low of 116.22 and a high of 117.17 versus the dollar, before closing at 116.27 in the New York session. On the data front, the Japanese trade balance shrank in June to 807.9 billion yen. Looking ahead, Unemployment rate, CPI, retail sales, and household spending data are due out tomorrow
  

• The Sterling (GBP) traded within a low of 1.8393 and a high of 1.8543, before closing at 1.8540 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7565 and a high of 0.7615, before closing at 0.7609 in the New York session. On the data front, strong CPI numbers were released showing an increase of 1.6% for the second quarter compared to an estimate of 1.0% and an increase of 4.0% for the year.
  
• Gold (XAU) rose by US$3.90 to US$621.90 an ounce backed by institutional buying benefiting from the weaker USD and stronger oil price.

TECHNICAL COMMENTARY

• Euro 1.2715

Initial support at 1.2559 (Jul 26 reaction low) followed by 1.2456 (Jul 19 corrective low). Initial resistance is now located at 1.2768 (76.4% retracement of the 1.2865 to 1.2456 decline) followed by 1.2781 (Jul 12 reaction high).

• Yen 116.30

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 117.41 (Jul 25 high) followed by 117.89 (Jul 20 high).

• Pound – 1.8545

Initial support at 1.8385 (Jul 25 low) followed by 1.8338 (61.8% retracement of the 1.8176-1.8600 rally). 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 – 0.7605

Initial support at 0.7518 (Jul 25 reaction low) followed by 0.7489 (Jul 20 low). Initial resistance is now at 0.7622 (July 26 high) followed by 0.7649 (May 31 reaction high).

• Gold – 625

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).