Australian FOREX Daily Outlook 29/05/2006

MARKET SUMMARY –29MAY06 (05:00GMT)

• The Dollar initially was weaker against the major currencies in the overnight session on the back of expected Core PCE deflator data. The market had forecasted a 0.2% rise for the month of April, and that is exactly what was released on Friday. The annual rate rose to 2.1% from 2.0%, just outside of the Federal Reserve’s comfort band of 1-2%. US personal income rose by 0.5% in April, with personal spending up 0.6% calming fears somewhat of a rate hike in late June. However, the dollar did rally against the major currencies towards the end of the session with traders squaring up positions ahead of the long weekend. In other markets, the Dow Jones index rose by 67 points and the NASDAQ finished up by 12 points. Crude oil rose slightly by 5c to USD$71.37 a barrel. Looking ahead, the US is on holiday for Memorial Day today.
  

• The Euro traded in a range of 1.2701 to 1.2833, before closing at 1.2738 in the New York session. On the data front, the Money Supply/Public Sector Credit Growth is due out tomorrow.
  

• The Japanese yen traded in a range of 111.80 to 112.77 versus the dollar, before closing at 112.69 in the New York session. On the data front, retail sales for April came in a little worse than expected, falling 0.6% from an expected 0.5%. The unemployment rate for April is due out tomorrow.
  

• The Sterling traded in a range of 1.8530 to 1.8767, before closing at 1.8591 in the New York session. On the data front, the UK is on a bank holiday today.
  

• The Aussie traded in a range of 0.7560 to 0.7610, before closing at 0.7580 in the New York session. On the data front, retail sales month on month are due out tomorrow.

• Gold moved higher to US$651.00 an ounce, a rise of $2.50.

Initial support at 0.7491 (May 24 low) followed by 0.7466 (May 22 low). Initial resistance is now at 0.7622 (May 26 high) followed by 0.7676 (May 18 high).