Markets focus on FOMC tonight
CURRENCY TRADING SUMMARY – 16th December 2008 (00:30GMT)
• U.S. Dollar Trading (USD) was sold off broadly as recent weakness in the Dollar became the new theme. US data did little to stem the tide of selling as the market focused on the coming FOMC meeting and expected rate cut. US Industrial Production fell -0.6% vs. -0.9% forecast. The December New York Fed Index fell to -25.8 vs. -25.4 previously as economic conditions continued to deteriorate. Oil was volatile with news of large OPEC cuts initially buoying the price to $50 a barrel before easing on demand concerns. In U.S. share markets, the NASDAQ was down 32 points (-2.10%) and the Dow Jones was down 65 points (-0.75%). Crude Oil closed down $1.77 ending the New York session at $44.51 per barrel. Looking ahead, Core CPI is seen +0.1% vs. -0.1% previously for a Y/Y rate of 2.1%. FOMC meet and are expected to cut US interest rates to 0.5% from 1.0%.
• The Euro (EUR) surged higher on speculation that the US will cut rates creating a greater yield differential between the two currencies. Resistance at 1.3500 was soft at best as the EURO glided up to 1.3700. Gains were mixed against the GBP but the EURO outpaced most of the currencies especially the Yen. Overall the EUR/USD traded with a low of 1.3431 and a high of 1.3726 before closing the day at 1.3700. Looking ahead, Eurozone Services PMI is expected at 41.2 in December and Manufacturing PMI forecast at 34.2.
• The Japanese Yen (JPY) with the market unwilling to test the 90 level again the USD/JPY kept to a tight range. Most of the movement was seen on the Crosses with GBP/JPY and EUR/JPY making solid gains on the back of their majors. Q4 TANKAN SURVEY -24 vs. -23 forecast indicating a large fall in manufacturing sentiment. Overall the USDJPY traded with a low of 90.27 and a high of 91.35 before closing the day around 90.60 in the New York session.
• The Sterling (GBP) made substantial gains as USD weakness provoked massive short covering on the pound and it rocketed towards 1.5300. After testing 90 on the EUR/GBP, cable strength allowed the pair to ease towards the 89 level. The next big level to relieve downside pressure will be seen at the 1.5500 level. Overall the GDP/USD traded with a low of 1.4923 and a high of 1.5378 before closing the day at 1.5310 in the New York session. Looking ahead, November CPI is seen falling -0.3% vs. -0.2% seen last month. Also released November Retail Price Index seen as 3.1% Y/Y vs. 4.2% previously.
• The Australian Dollar (AUD) gained but at a slower pace than the majors with weak US stocks weighing on investors risk sentiment. 0.6800 is the next target on the topside but significant headwind is expected with further gains likely to require a substantial change in global economic outlook. Overall the AUD/USD traded with a low of 0.6632 and a high of 0.6756 before closing the US session at 0.6710. Looking ahead, RBA minutes from the December meeting are expected to highlight economic concerns.
• Gold (XAU) gained as the USD weakens and investors looked for safe investments to weather the economic storm. Gold has traditional being used as a hedge against Dollar weakness. Overall trading with a low of USD$821.90 and high of USD$842.50 before ending the New York session at USD$838 an ounce.
TECHNICAL COMMENTARY
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3251 1.3337 1.3710 1.3769 1.3907
USD/JPY 88.07 88.20 90.70 91.86 92.88
GBP/USD 1.4816 1.4921 1.5320 1.5398 1.5534
AUD/USD 0.6453 0.6490 0.6705 0.6801 0.6986
XAU/USD 774.20 802.72 838.00 842.00 856.00
• Euro – 1.3710
Initial support at 1.3337 (Dec 15 low) followed by 1.3251 (Dec 12 low). Initial resistance is now located at 1.3769 (Oct 14 high) at followed by 1.3907 (Oct 3 high)
• Yen – 90.70
Initial support is located at 88.20 (Dec 12 low) followed by 88.07 (Range Projection). Initial resistance is now at 91.86 (Dec 12 high) followed by 92.88 (Dec 11 high).
• Pound – 1.5320
Initial support at 1.4921 (Dec 15 low) followed by 1.4816 (Dec 12 low). Initial resistance is now at 1.5398 (Dec 1 high) followed by 1.5534 (Nov 25 high).
• Australian Dollar – 0.6705
Initial support at 0.6490 (Dec 12 low) followed by the 0.6453 (Dec 8 low). Initial resistance is now at 0.6801 (Dec 11 high) followed by 0.6986 (Nov 10 high).
• Gold – 838
Initial support at 802.72 (Dec 10 low) followed by 774 (Dec 10 low). Initial resistance is now at 842 (Dec 15 high) followed by 856 (Oct 15 high).
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CURRENCY TRADING SUMMARY – 16th December 2008 (00:30GMT)
• U.S. Dollar Trading (USD) was sold off broadly as recent weakness in the Dollar became the new theme. US data did little to stem the tide of selling as the market focused on the coming FOMC meeting and expected rate cut. US Industrial Production fell -0.6% vs. -0.9% forecast. The December New York Fed Index fell to -25.8 vs. -25.4 previously as economic conditions continued to deteriorate. Oil was volatile with news of large OPEC cuts initially buoying the price to $50 a barrel before easing on demand concerns. In U.S. share markets, the NASDAQ was down 32 points (-2.10%) and the Dow Jones was down 65 points (-0.75%). Crude Oil closed down $1.77 ending the New York session at $44.51 per barrel. Looking ahead, Core CPI is seen +0.1% vs. -0.1% previously for a Y/Y rate of 2.1%. FOMC meet and are expected to cut US interest rates to 0.5% from 1.0%.
• The Euro (EUR) surged higher on speculation that the US will cut rates creating a greater yield differential between the two currencies. Resistance at 1.3500 was soft at best as the EURO glided up to 1.3700. Gains were mixed against the GBP but the EURO outpaced most of the currencies especially the Yen. Overall the EUR/USD traded with a low of 1.3431 and a high of 1.3726 before closing the day at 1.3700. Looking ahead, Eurozone Services PMI is expected at 41.2 in December and Manufacturing PMI forecast at 34.2.
• The Japanese Yen (JPY) with the market unwilling to test the 90 level again the USD/JPY kept to a tight range. Most of the movement was seen on the Crosses with GBP/JPY and EUR/JPY making solid gains on the back of their majors. Q4 TANKAN SURVEY -24 vs. -23 forecast indicating a large fall in manufacturing sentiment. Overall the USDJPY traded with a low of 90.27 and a high of 91.35 before closing the day around 90.60 in the New York session.
• The Sterling (GBP) made substantial gains as USD weakness provoked massive short covering on the pound and it rocketed towards 1.5300. After testing 90 on the EUR/GBP, cable strength allowed the pair to ease towards the 89 level. The next big level to relieve downside pressure will be seen at the 1.5500 level. Overall the GDP/USD traded with a low of 1.4923 and a high of 1.5378 before closing the day at 1.5310 in the New York session. Looking ahead, November CPI is seen falling -0.3% vs. -0.2% seen last month. Also released November Retail Price Index seen as 3.1% Y/Y vs. 4.2% previously.
• The Australian Dollar (AUD) gained but at a slower pace than the majors with weak US stocks weighing on investors risk sentiment. 0.6800 is the next target on the topside but significant headwind is expected with further gains likely to require a substantial change in global economic outlook. Overall the AUD/USD traded with a low of 0.6632 and a high of 0.6756 before closing the US session at 0.6710. Looking ahead, RBA minutes from the December meeting are expected to highlight economic concerns.
• Gold (XAU) gained as the USD weakens and investors looked for safe investments to weather the economic storm. Gold has traditional being used as a hedge against Dollar weakness. Overall trading with a low of USD$821.90 and high of USD$842.50 before ending the New York session at USD$838 an ounce.
TECHNICAL COMMENTARY
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3251 1.3337 1.3710 1.3769 1.3907
USD/JPY 88.07 88.20 90.70 91.86 92.88
GBP/USD 1.4816 1.4921 1.5320 1.5398 1.5534
AUD/USD 0.6453 0.6490 0.6705 0.6801 0.6986
XAU/USD 774.20 802.72 838.00 842.00 856.00
• Euro – 1.3710
Initial support at 1.3337 (Dec 15 low) followed by 1.3251 (Dec 12 low). Initial resistance is now located at 1.3769 (Oct 14 high) at followed by 1.3907 (Oct 3 high)
• Yen – 90.70
Initial support is located at 88.20 (Dec 12 low) followed by 88.07 (Range Projection). Initial resistance is now at 91.86 (Dec 12 high) followed by 92.88 (Dec 11 high).
• Pound – 1.5320
Initial support at 1.4921 (Dec 15 low) followed by 1.4816 (Dec 12 low). Initial resistance is now at 1.5398 (Dec 1 high) followed by 1.5534 (Nov 25 high).
• Australian Dollar – 0.6705
Initial support at 0.6490 (Dec 12 low) followed by the 0.6453 (Dec 8 low). Initial resistance is now at 0.6801 (Dec 11 high) followed by 0.6986 (Nov 10 high).
• Gold – 838
Initial support at 802.72 (Dec 10 low) followed by 774 (Dec 10 low). Initial resistance is now at 842 (Dec 15 high) followed by 856 (Oct 15 high).
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