Australian FOREX Daily Outlook 06/03/2006

MARKET SUMMARY –  06MAR06 (05:00GMT)
                                                                     

• The Dollar for the most part traded sideways against the major currencies on Friday. The US ISM services index rose from 56.8 to 60.1 in February with employment up but prices – paid index easing. The market expectations had centered on 58.0. The final reading of US consumer sentiment in February was placed at 86.7, down from 91.2 in January. In other markets, the Dow Jones index fell by 4pts while the NASDAQ was down 9pts. Crude oil prices rose slightly on short-covering on Friday as investors focused on this week’s meeting of OPEC oil ministers. Crude oil rose by US31c to US$63.67 a barrel.

• The Euro traded in a range of 1.1996 to 1.2053, before closing near its highs in the New York session. The services PMI's in Europe was robust, Italy growing at its fastest pace in 19 months , France increasing more than anticipated and though Germany's pace of expansion eased slightly it consolidated at a high of 57.8 level. The end result is that the Eurozone Services PMI was at 5 year highs.

• The Japanese yen traded in a range of 116.23 to 116.80 versus the dollar, before closing at 116.42 in the New York session. The market is now focused on the beginning of the end in quantitative easing which some analysts believe could be announced at the conclusion of BOJ’s monetary policy meeting this week.

• The Sterling traded in a range of 1.7503 to 1.7587, before closing at 1.7560 in the New York session.

• The Aussie traded in a range of 0.7423 to 0.7461, before closing at .7445 in the New York session.

• Gold rose a high as US$572.50 an ounce, but ended the day down by US$2.40 to US$568.00 an ounce.

TECHNICAL COMMENTARY

• Euro 1.2070

Initial support at 1.1976 (Feb 20 high) followed by 1.1889 (Mar 1 low). Initial resistance is now located at 1.2133 (61.8% retracement of the 1.2324 to 1.1825 decline) followed by 1.2190 (Jan 31 reaction high).

• Yen 116.90

Initial support is located at 115.45 (Mar 1 low) followed by 114.82 (76.4% retracement of the 113.41 to 119.41 rally). Initial resistance is now at 117.17 (Feb 24 high) followed by 118.54(Feb 23 high).

• Pound – 1.7585

Initial support at 1.7373 (Feb 28 low) followed by 1.7302 (3 month channel base). Initial resistance is now at 1.7596 (Mar 1 high) followed by 1.7643 (Feb 6 high).

• Aussie – 0.7455

Initial support at 0.7416 (March 1 low) followed by 0.7343 (Feb 22 low). Initial resistance at 0.7496 (61.8% retracement of the 0.7590 to 0.7343 decline) followed by 0.7590 (Jan 31 high).