Central Banks announce joint venture to ease short term funding pressure. USD reverses it rally.
CURRENCY TRADING SUMMARY â€“ 13 DECEMBER 2007 (00:30GMT)
â€¢ U.S. Dollar Trading (USD) eased from it previous session rally, post Fed rate cut on Tuesday. The dollar further weakened as central banks announced a joint effort to ease the credit squeeze by encouraging short- term lending among financial institutions. The move today by the Fed, the ECB, the Bank of Canada, the Bank of England and the Swiss National Bank comes as the collapse in the sub-prime mortgage market has crimped banks' willingness to lend to each other, threatening to tip the U.S. economy into recession. In other news, the Trade Balance widened to -57.82 bln, from -57.20. In US share markets the NASDAQ was up by 18.79 points (+0.71%) whilst the Dow Jones was also down 41.13 points (+0.31%). Crude oil rallied on Wednesday, up by US$3.88 a barrel to US$93.90. Looking ahead, PPI and Core Retail Sales key data release for Thursday.
â€¢ The Euro (EUR) gained almost 0.4% versus the dollar on growing concerns of global growth, following the joint agreement by central banks to ease the credit squeeze. Overall the EURUSD traded with a low of 1.4652 and a high of 1.4750 before closing the day at 1.4717 in the New York session.
â€¢ The Japanese Yen (JPY) tumbled across the board, as the Federal Reserve announced a joint venture to ease credit concerns by encouraging short term lending. As expected, the announcement prompted to fund high yielding carry trades using the Japanese currency. The USDJPY traded with a low of 110.66 and a high of 112.48 before closing the day at 112.05 in the New York session.
â€¢ The Sterling (GBP) rose against the dollar as following the central banks joint venture ship. The BoE, which part of the group, said it will widen the range of collateral it will accept on three month loans and increase the size of reserves it will auction in money-market operations, pushing the GBP to a week high versus the dollar. Overall the GBPUSD traded with a low of 110.66 and a high of 112.48 before closing the day at 112.05 in the New York session.
â€¢ The Australian Dollar (AUD) surged on the back of the central banks joint venture ship, prompting the AUDJPY to be well supported. The AUDUSD traded with a low of 0.8728 and a high of 0.8905 before closing the day at 0.8819 in the New York session. Thursday morning saw the release of the Unemployment rate which was released at 4.5%, forecast 4.3%.
â€¢ Gold (XAU) rose after U.S. and European central banks joined to add cash to the banking system, boosting the appeal of the precious metal as hedge against inflation. XAU traded with a low of 797.50 and a high of 817.00.
â€¢ Euro â€“ 1.4720
Initial support at 1.4641 (Dec 10 low) followed by 1.4600 (Dec 7 low). Initial resistance is now located at 1.4770 (Dec 12 high) followed by 1.4800 (61.8% retracement of the 1.4968 to 1.4527 decline).
â€¢ Yen â€“ 111.95
Initial support is located at 110.47 (Dec 11 low) followed by 110.00 (Psychological round number). Initial resistance is now at 112.59 (50% retracement of the 117.95 to 107.23 decline) followed by 112.88 (Nov 9 high)
â€¢ Pound â€“ 2.0445
Initial support at 2.0331 (Dec 11 low) followed by 2.0299 (Dec 10 low). Initial resistance is now at 2.0584 (61.8% retracement of the 2.0833 to 2.0181 decline) followed by 2.0612 (Dec 5 high)
â€¢ Australian Dollar â€“ 0.8840
Initial support a 0.8711 (Dec 11 low) followed by 0.8661 (Dec 5 low). Initial resistance is now at 0.8896 (Dec 11 high) followed by 0.8921 (Nov 28 high)
â€¢ Gold â€“ 811.50
Initial support at 791.80 (Dec 7 low) followed by 777.20 (Dec 3 low). Initial resistance is now at 812.98 (Dec 11 high) followed by 815.70 (November 27 high)