Australian FOREX Daily Outlook 29/06/2006

MARKET SUMMARY –29JUNE06 (05:00GMT)

• The Dollar slightly appreciated against the major currencies in the overnight session with the impending decision by the Federal Reserve to increase rates or not helping to subdue any volatility in the markets before results come out tomorrow. In other markets, the Dow Jones index strengthened by 48pts and the NASDAQ gained 11pts with thin trading volumes ahead of the Federal Reserve interest rate decision. Crude oil rose with US crude oil stocks showing a larger than expected decline coupled with the continuing closure of the important shipping lane in Louisiana. Crude oil finished at US$72.19 a barrel, up US27c. Looking ahead, the all important FOMC meeting concludes today with a decision on interest rates announced soon after. GDP figures are also due out later today.
  

• The Euro traded in a range of 1.2519 to 1.2583, before closing at 1.2556 in the New York session. Looking ahead, M3 figures for the Euro Zone are due out today with an estimate of 8.8% versus 8.8% the previous month.
  

• The Japanese yen traded in a range of 116.10 to 116.48 versus the dollar, before closing at 116.48 in the New York session. On the data front, industrial production came in worse than expected at -1.0% whereas the market was expecting -0.1%. Looking ahead, Jobless rate, CPI, and housing starts are due out tomorrow.
  

• The Sterling traded in a range of 1.8144 to 1.8239, before closing at 1.8180 in the New York session. Looking ahead, GDP numbers are due out tomorrow.
  

• The Aussie traded in a range of 0.7270 to 0.7324, before closing at 0.7288 in the New York session.
  
• Gold fell by US$3.40 to US$581.00 an ounce as the market awaits the results of the 2 day FOMC meeting in the US. Base metals however were generally higher on thin trading with both copper and nickel gaining more than 2%.

TECHNICAL COMMENTARY

• Euro 1.2545

Initial support at 1.2478 (June 23 low) followed by 1.2403 (50% retracement of the 1.1951 to 1.2980 rally). Initial resistance is now located at 1.262 (June 27 high) followed by 1.2681(Jun 22 high).

• Yen 116.45

Initial support is located at 115.76 (June 23 low) followed by 114.37 (Jun 21 low). Initial resistance is now at 116.72 (Jun 26 high) followed by 116.95 (76.4% retracement of the 119.41 to 108.98 decline).

• Pound – 1.8175

Initial support at 1.8126 (June 23 low) followed by 1.7916 (61.8% retracement of the 1.7230 to 1.9027 rally). Initial resistance is now at 1.8315 (Jun 23 reaction high) followed by 1.8316 (Jun 13 low).

• Aussie – 0.7285

Initial support at 0.7269 (Jun 28 low) followed by 0.7237 (Apr 13 low). Initial resistance is now at 0.7353 (June 27 high) followed by 0.7424 (June 22 high).