Australian FOREX Daily Outlook 29/09/2006

CURRENCY TRADING SUMMARY –29 SEPTEMBER06 (01:30GMT)

• U.S. Dollar Trading (USD) strengthened slightly against the majors in the overnight foreign exchange trading session even as second quarter GDP came in worse than expected and jobless claims fell. US GDP fell to 2.6% from a 2.9% expectation and jobless claims came in at 316k from a 315k expectation. In other markets, the Dow Jones index climbed 29pts while the NASDAQ gained 6pts as investors shrugged off economic growth concerns in the US. Crude oil dipped by US21c to close at US$62.75 a barrel as larger than average stock supplies eased concerns in the market. Looking ahead, personal income and spending, PCE price index, and Chicago PMI are due out tonight.
  

• The Euro (EUR) traded within a low of 1.2680 and a high of 1.2731, before closing at 1.2703 in the New York session. ECB member Axel Weber said that more interest rate hikes were needed to ward off inflation.
  

• The Japanese Yen (JPY) traded within a low of 117.35 and a high of 117.92 versus the dollar, before closing at 117.81 in the New York session. On the data front, household spending came in worse than expected at -4.3% compared to -1.3%. However, CPI, unemployment, and industrial production all came in on expectations at 0.3%, 4.1%, and 1.9% respectively. Comments yesterday from Vice Minister Fujii stating that falls of the JPY against the EUR were a “little rough” caused the Yen to rally, countering comments previously from Finance Minister Omi that the Ministry of Finance were not concerned with EUR/JPY strength.
  

• The Sterling (GBP) traded within a low of 1.8726 and a high of 1.8914, before closing at 1.8756 in the New York session. There was a statistical error reported by the Office of National Statistics which had ramifications for both the UK rate outlook and GBP positions. Looking ahead, mortgage approvals are due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7475 and a high of 0.7500, before closing at 0.7485 in the New York session. Earlier today, a weaker than expected NZD GDP result caused a decline in the Kiwi as well as sympathy selling in the AUD.
  

• Gold (XAU) rose by US$7.60 to US$610.90 as end of month buying dominated metal trading.

TECHNICAL COMMENTARY

• Euro 1.2695

Initial support at 1.2661 (Sep 26 low) followed by 1.263 (Sep 15 reaction low). Initial resistance is now located at 1.2768 (61.8% retracement of the 1.2834 to 1.2661 decline) followed by 1.2834 (Sep 22 reaction high).

• Yen 117.75

Initial support is located at 116.89 (Sep 27 low) followed by 116.06 (Sep 22 low). Initial resistance is now at 118.3 (Sep 18 reaction high) followed by 118.56 (Multi-year key trend line / triangle resistance).

• Pound – 1.8760

Initial support at 1.8713 (76.4% retracement of the 1.8601 to 1.9076 advance) followed by 1.8601 (Sep 11 low). Initial resistance is now at 1.8919 (Sep 28 high) followed by 1.8962 (Sep 27 high).

• Australian Dollar – 0.7475

Initial support at 0.7462 (Sep 28 low) followed by 0.7442 (61.8% retracement of the 0.7269 to 0.7722 rally). Initial resistance is now at 0.7557 (Sep 26 high) followed by 0.7582 (Sep 21 high).

• Gold – 600

Initial support at 590.1 (Sep 27 low) followed by 582.49 (Sep 25 low). Initial resistance is now at 607.3 (Sep 28 high) followed by 614.01 (61.8% retracement of the 640.60 to 571.00 decline).