Australian FOREX Daily Outlook 13/10/2006

Australian Dollar continues to climb. US trade balance widens to record high. Beige Book provided mixed comments on the state of the US economy.

CURRENCY TRADING SUMMARY –13 OCTOBER 06 (01:30GMT)

• U.S. Dollar Trading (USD) was weaker against the majors in the overnight forex session as the US trade balance posted a record deficit. The trade deficit widened to US$69.86bln in September from US$68bn in August, whereas the market had expected a fall to US$66.5bln. Reports in the Beige book showed a mix picture of regional US economic growth in September with only two Federal Reserve districts reporting weaker growth. It did note however the nationwide cooling in the housing market. In other markets, the Dow Jones index ended at record highs, finishing up 95pts while the NASDAQ lifted 38pts as better than expected earnings reports and Beige Book commentary spurred on buying in the markets. Crude oil rose after a drop in US inventories by US27c to US$57.86 a barrel. Looking ahead, US retail sales are due out tonight.
  

• The Euro (EUR) traded within a low of 1.2514 and a high of 1.2567, before closing at 1.2549 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 119.25 and a high of 119.78 versus the dollar, before closing at 119.42 in the New York session. Looking ahead, the Bank of Japan announces their decision on interest rates today.
  

• The Sterling (GBP) traded within a low of 1.8537 and a high of 1.8615, before closing at 1.8576 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7472 and a high of 0.7513, before closing at 0.7504 in the New York session. The AUD continued to rally spurred on by poor NZD retail sales this morning.
  

• Gold (XAU) rose by US$3.80 to US$580.30 an ounce in response to a rise in oil and a weaker US dollar.

TECHNICAL COMMENTARY

• Euro 1.2560

Initial support at 1.2502 (Oct 10 low) followed by 1.2456 (Jul 19 reaction low and key support). Initial resistance is now located at 1.2615 (Oct 9 high) followed by 1.271 (Oct 6 high).

• Yen 119.20

Initial support is located at 118.82 (Oct 9 low) followed by 117.32 (Sep 2 low). Initial resistance is now at 119.85 (Oct 11 high) followed by 120.0 (Psychological round number resistance).

• Pound – 1.8595

Initial support at 1.8493 (61.8% retracement of the 1.8090 to 1.9146 advance) followed by 1.8385 (Jul 25 low). Initial resistance is now at 1.8616 (Oct 12 high) followed by 1.8715 (Oct 10 high).

• Australian Dollar – 0.7515

Initial support at 0.7414 (Oct 4 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7532 (38.2% retracement of the 0.7722 to 0.7414 decline) followed by 0.7557 (Sep 26 high).

• Gold – 579

Initial support at 560.13 (Oct 4 low) followed by 554.4 (Jun 15 low). Initial resistance is now at 581.2 (Oct 10 high) followed by 598.25 (Oct 3 high).