Australian FOREX Daily Outlook 25/10/2006

Markets positioning themselves for the FOMC interest rate decision later today. Important Asia-Pacific data due as well as German IFO business climate.

CURRENCY TRADING SUMMARY –  25 OCTOBER 06 (01:30GMT)
                                                                     

• U.S. Dollar Trading (USD) softened against the majors in the overnight forex session with traders adjusting positions ahead of the important FOMC interest rate decision. Market is waiting for any clues from the Federal Reserve with regards to future monetary policy, and their stance on inflationary pressures in the US. The US Richmond Federal Reserve manufacturing index fell from 9 to -2 in October, worse than the expected level of 9. In other markets, the Dow Jones index rose by 11pts and the NASDAQ gave up 11pts as the markets await the interest rate decision by the Federal Reserve. Crude oil rose by US54c to US$59.35 a barrel as the United Arab Emirates advised buyers that it will indeed cut oil exports next month. Looking ahead, existing home sales and the FOMC interest rate decision is due out tonight.
  
• The Euro (EUR) traded within a low of 1.2525 and a high of 1.2577, before closing at 1.2566 in the New York session. On the data front, industrial orders came in at 3.7% compared to a 0.8% estimate. Looking ahead, German IFO is due out today.
  
• The Japanese Yen (JPY) traded within a low of 119.08 and a high of 119.66 versus the dollar, before closing at 119.25 in the New York session. On the data front, Japanese Trade Balance came in at 1.014bln yen compared to an 853.7bln estimate.   
  
• The Sterling (GBP) traded within a low of 1.8674 and a high of 1.8770, before closing at 1.8742 in the New York session.
  
• The Australian Dollar (AUD) traded within a low of 0.7561 and a high of 0.7589, before closing at 0.7578 in the New York session. On the data front, Australian CPI came out at 0.9%, better than the expected 0.8% level.
  
• Gold (XAU) rose by US$4.70 to US$587.60 an ounce as gold tracks oil higher.

• Euro 1.2565

Initial support at 1.2524 (Oct 24 low) followed by 1.2483 (Oct 16 low). Initial resistance is now located at 1.2644 (Oct 19 high) followed by 1.27 (61.8% retracement of the 1.2834 to 1.2483 decline).

• Yen 119.20

Initial support is located at 118.56 (Oct 23 low) followed by 118.04 (Oct 19 low). Initial resistance is now at 119.9 (Oct 13 trend high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8740

Initial support at 1.8663 (Oct 18 low) followed by 1.8649 (61.8% retracement of the 1.8516 to 1.8863 advance). Initial resistance is now at 1.8771 (Oct 24 high) followed by 1.8863 (Oct 20 high).

• Australian Dollar – 0.7605

Initial support at 0.7524 (Oct 17 low) followed by 0.7489 (Oct 13 low). Initial resistance is now at 0.7617 (Oct 23 high) followed by 0.7649 (76.4% retracement of the 0.7722 to 0.7414 decline).

• Gold – 584

Initial support at 569.35 (Oct 10 low) followed by 560.13 (Oct 4 low). Initial resistance is now at 592.9 (Oct 23 high) followed by 602.6 (Oct 20 high).