Australian FOREX Daily Outlook 30/08/2006

CURRENCY TRADING SUMMARY –30 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) weakened against the majors in the overnight foreign exchange trading session as the release of the FOMC minutes conveyed the thoughts of the Federal Reserve in choosing to pause in their rate hiking cycle. Although the voting was not unanimous to raise rates, the general consensus was that leaving rates where they are was less risky than raising them. Slowing economic growth was a key factor in the decision to leave rates on hold with the futures market pricing in a 12% chance of a hike in September by the Federal Reserve. In other markets, the Dow Jones index rose by 18pts after being down 53pts during the session, and the NASDAQ rose by fewer than 12 pts in response to the slightly dovish FOMC minutes. Crude oil fell US90c to US$69.71 a barrel as news released showed that tropical storm Ernesto would miss oil rigs in the Gulf of Mexico. Crude oil dipping below US$70 a barrel has not been seen since June this year. Looking ahead, US ADP payroll numbers, GDP, and the Core PCE Deflator for the second quarter are all due out today.
  

• The Euro (EUR) traded within a low of 1.2751 and a high of 1.2839, before closing at 1.2823 in the New York session. Looking ahead, Eurozone GDP, HICP estimate, and ECB interest rate announcement are due out tomorrow.
  

• The Japanese Yen (JPY) traded within a low of 116.52 and a high of 117.24 versus the dollar, before closing at 116.67 in the New York session. On the data front, disappointed coming in at -0.2% from a 0.3% estimate.
  

• The Sterling (GBP) traded within a low of 1.8899 and a high of 1.9027, before closing at 1.8993 in the New York session. Looking ahead, mortgage approvals are due out today.

• The Australian Dollar (AUD) traded within a low of 0.7600 and a high of 0.7638, before closing at 0.7636 in the New York session. On the data front, retails sales were softer but better than expected at 0.6% from 0.5% expectations with a previous result of 1.0%. Looking ahead, private capital expenditure is due out tomorrow.
  
• Gold (XAU) fell by US$4.80 to US$609.10 an ounce in thin trading as the price was driven down by speculative liquidation by funds.

TECHNICAL COMMENTARY

• Euro 1.2830

Initial support at 1.2723 (Aug 25 low) followed by 1.2695 (Aug 15 low). Initial resistance is now located at 1.2854 (Aug 23 high) followed by 1.2941 (Aug 21 high).

• Yen 116.70

Initial support is located at 116.42 (Aug 25 low) followed by 116.09 (Aug 23 low). Initial resistance is now at 117.42 (Aug 25 high) followed by 117.87 (Jul 19 high).

• Pound – 1.8995

Initial support at 1.883 (Aug 25 low) followed by 1.8775 (Aug 18 low). Initial resistance is now at 1.9031 (Aug 29 high) followed by 1.9146 (Aug 8 trend high).

• Australian Dollar – 0.7635

Initial support at 0.7546 (38.2% retracement of the 0.7269 to 0.7717 advance) followed by 0.7489 (Jul 20 low). Initial resistance is now at 0.7673 (Aug 23 high) followed by 0.7702 (Aug 16 high).

• Gold – 614

Initial support at 607.67 (Aug 18 low) followed by 602.66 (Jul 24 reaction low). Initial resistance is now at 630.5 (Aug 23 high) followed by 633.1 (Aug 14 high).