Australian FOREX Daily Outlook 30/06/2006

MARKET SUMMARY –  30JUNE06 (05:00GMT)
                                                                     

• The Dollar fell markedly against all the majors in the overnight session as the US Federal Reserve decided to hike rates by 25bp after their 2 day FOMC meeting. The market reacted strongly against the greenback as comments after the FOMC announcement were interpreted as dovish by analysts. Statements stressed that the next move in interest rates would be dependent on inflation and economic growth data. US GDP for the March quarter was in line with expectations coming in at 5.6%. In other markets, the Dow Jones index rallied after the announcement by the FOMC rising 217pts while the NASDAQ rose 63pts. Crude oil prices strengthened ahead of the July 4 holiday in the US, moving up US$1.33 a barrel to US$73.52. Looking ahead, PCE deflator figures as well as personal incoming/spending are due out today.
  
• The Euro traded in a range of 1.2522 to 1.2666, before closing at 1.1.2665 in the New York session. Looking ahead, CPI estimates and business climate indicator are due out today.
  
• The Japanese yen traded in a range of 114.87 to 116.61 versus the dollar, before closing at 115.18 in the New York session. On the data front, CPI came in right on expectations at 0.6%, PMI manufacturing fell to 54.3 from previous month of 55.3, and the unemployment rate surprised coming in at 4.0% from an expected 4.1%. Looking ahead the Tankan survey is due next week.
  
• The Sterling traded in a range of 1.8092 to 1.8297, before closing at 1.8273 in the New York session.
  
• The Aussie traded in a range of 0.7274 to 0.7400, before closing at 0.7383 in the New York session.
  
• Gold rose by US$7.90 to US$588.90 an ounce following the increase in interest rates in the US which induced speculative buying.

• Euro 1.2670

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 1.2681 (June 22 high) followed by 1.2809(Jun 8 high).

• Yen 115.05

Initial support is located at 114.37 (June 21 low) followed by 113.56 (Jun 9 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 – 1.8295

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 – 0.7400

Initial support at 0.7269 (Jun 28 low) followed by 0.7237 (Apr 13 low). Initial resistance is now at 0.7424 (June 22 high) followed by 0.745 (June 16 high).