â€¢ U.S. Dollar Trading (USD) once again was choppy versus a number of other majors, trading on the back of other markets. In a data absent session, focus shifted to the Terms Auction Facility (TAF) on Monday, as markets measurement of the extent of the credit crisis will be indicated by the amount of money being borrowed. In U.S. share markets the NASDAQ was down -16.48 points (-0.17%) whilst the Dow Jones also fell by -25.20 points (-0.19%). Crude oil rose by US$1.40 an ounce to US$91.50 as inventories in the US had fallen to its lowest level in three years. Thursday sees data in the form of GDP for the third quarter (Forecast: 4.9%; Prior: 4.9%) as well as the Philly Fed survey for the month of December which is expected to come in at 7.0 (Previous: 8.2)
â€¢ The Euro (EUR) continued its month of declines against the USD, although remaining indifferent post IFO data, a tumbling Sterling ensured that the Euro was pulled down with it. The IFO index was released at 103, slightly lower than the forecasted 103.8 for the month of December, falling just short of a two year low reading. President Trichetâ€™s speech in front of Parliamentary members emphasized the risk of price stability in the medium term remain on the â€˜upsideâ€™, whilst rising food and energy prices are a point of focus. Inflation was expected to remain above 2% in the near term and would only moderate slightly in 2008. The EURUSD traded with a low of 1.4325 and a high of 1.4423 before closing the day at 1.4381 in the New York session.
â€¢ The Japanese Yen (JPY) traded on the back of other majors, and tracked moves in equity markets. Overall the USDJPY traded with a low of 112.75 and a high of 113.50 before closing the day at 113.35 in the New York session. Trade Balance was released at 797.4 bln For November below the forecasted 917.5 bln, whilst the BoJ is widely expected to keep interest rates on hold on Thursday.
â€¢ The Sterling (GBP) was the worst performing currency on Wednesday as the BoE minutes ensured the GBP traded below the $2 for the first time in two months. As the minutes confirmed a 9 â€“ 0 vote for a rate cut, expectations lie that further rate cuts may materialize to prevent further credit crunches. Overall the GBPUSD traded with a low of 1.9929 and a high of 2.0196 before closing the day at 1.9964. GDP for the third quarter is expected to be confirmed at 0.7%.
â€¢ The Australian Dollar (AUD) traded in a tight range, tracking other majors and stock prices. The AUDUSD traded with a low of 0.8561 and a high 0.8637 before closing the day at 0.8589 in the New York session.
â€¢ Gold (XAU) traded in a tight range by its standards, as markets continue to remain indecisive on the precious metal. XAU traded with a low of 798.15 and a high of 804.55.
â€¢ Euro â€“ 1.4390
Initial support at 1.4325 (Dec 19 low) followed by 1.4307 (1.4751 minus 1.4968 â€“ 1.4528). Initial resistance is now located at 1.4527 (Dec 6 low) followed by 1.4658 (Dec 14 high).
â€¢ Yen â€“ 113.30
Initial support is located at 112.75 (Dec 19 low) followed by 112.20 (Dec 14 low). Initial resistance is now at 113.59 (Dec 14 high) followed by 113.85 (61.8% retracement of the 117.95 to 107.23 decline)
â€¢ Pound â€“ 1.9980
Initial support at 1.9929 (Dec 19 low) followed by 1.9877 (Sep 18 low). Initial resistance is now at 2.0196 (Dec 19 high) followed by 2.0228 (Dec 17 high)
â€¢ Australian Dollar â€“ 0.8595
Initial support a 0.8553 (Dec 18 low) followed by 0.8538 (38.2% retracement of the 0.7676 to 0.9400 advance). Initial resistance is now at 0.8654 (Nov 21 low and former rang low) followed by 0.8795 (Dec 14 high)
â€¢ Gold â€“ 803.00
Initial support at 785.66 (Dec 17 low) followed by 777.20 (Dec 3 low). Initial resistance is now at 806.55 (Dec 18 high) followed by 812.20 (December 13 high)