Australian FOREX Daily Outlook 30/10/2006

US GDP comes in worse than expected. Core PCE for the quarter much softer. Majors rally against the US Dollar.

CURRENCY TRADING SUMMARY –30 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) was lower against the majors in the Friday night forex session as US GDP came in much lower than expected. US GDP dropped to 1.6% from 2.6% in the second quarter where the market was expecting a drop to 2.2%. Core PCE for the third quarter dropped also to 2.5% from an expected drop to 3.3% from 4%. In other markets, the Dow Jones fell by 73pts and the NASDAQ fell by 28pts as lower than expected GDP impacted growth stocks. Crude oil rose by US39c to US$60.75 a barrel as a possible threat to an oil refinery in the Gulf affected the market. Looking ahead, the Core PCE deflator for September is due out tonight.
  

• The Euro (EUR) traded within a low of 1.2664 and a high of 1.2751, before closing at 1.2735 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 117.13 and a high of 118.73 versus the dollar, before closing at 117.60 in the New York session. On the data front, Japanese industrial production came in at -0.7% compared to a -1% estimate for the month of September. Looking ahead, unemployment rate and the BoJ interest rate announcement are due out tomorrow.
  

• The Sterling (GBP) traded within a low of 1.8872 and a high of 1.9003, before closing at 1.8961 in the New York session. Looking ahead, mortgage approvals are due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7625 and a high of 0.7696, before closing at 0.7687 in the New York session.
  

• Gold (XAU) rose by US$1.20 to US$601 an ounce as the US Dollar weakened and oil rose.

TECHNICAL COMMENTARY

• Euro 1.2725

Initial support at 1.2597 (Oct 26 low) followed by 1.2524 (Oct 24 low). Initial resistance is now located at 1.2751 (76.4% retracement of the 1.2834 to 1.2483 decline) followed by 1.2769 (Oct 3).

• Yen 117.45

Initial support is located at 116.97 (76.4% retracement of the 116.06 to 119.90 advance) followed by 116.06 (Sep 22 low). Initial resistance is now at 118.74 (Oct 27 high) followed by 119.67 (Oct 24 high).

• Pound – 1.8970

Initial support at 1.887 (Oct 27 low) followed by 1.8768 (Oct 26 low). Initial resistance is now at 1.9076 (Sep 25 high) followed by 1.9094 (Aug 31 high).

• Australian Dollar – 0.7690

Initial support at 0.7623 (Oct 27 low) followed by 0.7559 (Oct 24 low). Initial resistance is now at 0.7722 (Sep 4 high) followed by 0.7795 (May 11 trend high).

• Gold – 601

Initial support at 590.45 (Oct 26 low) followed by 580.05 (Oct 25 low). Initial resistance is now at 602.6 (Oct 20 high) followed by 607.01 (Sep 28 high).