Australian FOREX Daily Outlook 21/09/2006

CURRENCY TRADING SUMMARY –  21 SEPTEMBER06 (05:00GMT)
                                                                     

• U.S. Dollar Trading (USD) was generally neutral against the majors in the overnight foreign exchange trading session as the Federal Reserve decided to keep rates on hold, and the accompanying press statement was less dovish than expected. Voting members voted 10-1 in favour of keeping rates on hold noting that moderation in economic growth appears to be continuing, partly reflected in a cooling housing market. They also noted that readings on core inflation have been elevated however, inflation pressures seem likely to moderate over time. In other markets, the Dow Jones index rose by 72pts while the NASDAQ rose by 30pts as lower oil prices and steady interest rates buoyed investor sentiments. Crude oil fell by US$1.20 a barrel to US$60.46 a barrel as a rise in distillate and gasoline supplies in the US helped reduce supply fears. Looking ahead, the Philly Fed Survey is due out tonight.
  
• The Euro (EUR) traded within a low of 1.2652 and a high of 1.2725, before closing at 1.2688 in the New York session. Looking ahead, Eurozone current account is due out today.
  
• The Japanese Yen (JPY) traded within a low of 117.01 and a high of 117.62 versus the dollar, before closing at 117.45 in the New York session. On the data front, the trade balance came in at 200.5billion yen surplus compared to an estimated surplus of 451.1billion.
  
• The Sterling (GBP) traded within a low of 1.8775 and a high of 1.8886, before closing at 1.8870 in the New York session. On the data front, the MPC minutes showed a vote 8-0 in favour of leaving rates on hold.
  
• The Australian Dollar (AUD) traded within a low of 0.7520 and a high of 0.7545, before closing at 0.7520 in the New York session. 
             
• Gold (XAU) rose by US$3.00 to US$576.20 an ounce on the back of speculative physical buying and short covering.

TECHNICAL COMMENTARY

• Euro 1.2715

Initial support at 1.263 (Sep 15 low) followed by 1.257 (76.4% retracement of the 1.2456 to 1.2941 advance). Initial resistance is now located at 1.2755 (Sep 14 high) followed by 1.2836 (Sep 6 high).

• Yen 117.20

Initial support is located at 116.97 (Sep 20 low) followed by 116.6 (Sep 11 low). Initial resistance is now at 118.3 (Sep 18 high) followed by 118.9 (Apr 11 reaction high).

• Pound – 1.8915

Initial support at 1.8734 (Sep 18 low) followed by 1.8601 (Sep 11 low). Initial resistance is now at 1.8931 (Sep 20 high) followed by 1.8978 (76.4% retracement of the 1.9094 to 1.8601 decline).

• Australian Dollar – 0.7565

Initial support at 0.7482 (Sep 13 low) followed by 0.7442 (61.8% retracement of the 0.7269 to 0.7722 rally). Initial resistance is now at 0.7576 (Sep 19 high) followed by 0.7601 (Sep 8 high and 50% ret 0.7722 to 0.7482 decline).

• Gold – 575

Initial support at 571 (Sep 15 low) followed by 561.0 (Jun 20 low). Initial resistance is now at 589.25 (Sep 18 high) followed by 595.35 (Sep 14 high).