Normal 0 false false false EN-US X-NONE X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:Table Normal;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:none;
mso-hyphenate:none;
text-autospace:ideograph-other;
font-size:12.0pt;
font-family:Times New Roman,serif;
mso-bidi-font-family:Tahoma;
mso-font-kerning:1.5pt;}

Normal 0 false false false EN-US X-NONE X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:Table Normal;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:none;
mso-hyphenate:none;
text-autospace:ideograph-other;
font-size:12.0pt;
font-family:Times New Roman,serif;
mso-bidi-font-family:Tahoma;
mso-font-kerning:1.5pt;}

U.S. Dollar Trading (USD) stocks fell on the first full trading day this week with Eurozone debt concerns the main catalyst for the move lower. Tensions in the Middle East are also providing a risk off mood as the US 5th Fleet countered Iran’s threats of closing the Strait of Hormuz. Looking ahead, December Chicago PMI forecast at 61 vs. 62.6 previously. Also Weekly Jobless Claims forecast at 375k vs. 364k previously.

The Euro (EUR) bond auctions for short term Italian debt were successful but the bounce was short lived and heavy Euro selling later in the US session sent the major through 1.3000 and new multi-month lows near 1.2900. The outlook is now negative technically but there are more important auctions today including a 10 year Italian which may change the Euro’s direction. Looking ahead, November Private loans forecast at 2.6% vs. 2.7% previously.

The Japanese Yen (JPY) USD/JPY remained under pressure as EUR/JPY slumped and dragged the major lower. EUR/JPY is close to the Y100 level and a break below could prompt action from BOJ officials. The Japan Finance minister spoke about interventions being necessary and they have successfully stabilized the USD/JPY.

The Sterling (GBP) was dragged aggressively lower with stocks/Euro falling below 1.5600 and then 1.5500 in the US session. The outlook is negative while the Eurozone debt crisis rolls on. The USD is very strong in recent sessions and without some good news a move below the bottom of the recent range at 1.5400 is very possible.

The Australian Dollar (AUD) Slumped with risk off trade and is now targeting the major big figure at 1.0000 if stocks continue to press lower. AUD/JPY is struggling as USD/JPY is kept capped and the recent rally may be unwound if support at Y78 is broken on the Aussie cross.

Oil & Gold (XAU) Gold fell heavily down to $1550 with support crumbling in the US session. Oil fell back below $100 as the initial reaction to Iran’s threat wore off with most analysts believing it is just a bluff to prevent strikes on its Nuclear program.

Pairs to watch

AUD/USD eyeing Parity

XAU/USD oversold time for bounce?

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2828

1.2860

1.2925

1.3017

1.3055

USD/JPY

76.84

77.49

77.80

78.29

78.98

GBP/USD

1.5337

1.5408

1.5450

1.5600

1.5692

AUD/USD

0.9861

1.0052

1.0080

1.0225

1.0380

XAU/USD

1522.00

1532

1555

1616

1642

OIL/USD

95.00

98.00

99.70

100.00

101.50

Euro – 1.2925

Initial support at 1.2860 (Jan 10 low) followed by 1.2828 (Sept 14 2010 low). Initial resistance is now located at 1.3017 (Dec 22 support) followed by 1.3055 (Dec 28 high)

Yen – 77.80

Initial support is located at 77.49 (Dec 9 low) followed by 76.84 (Nov 22 low). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.98 (Nov 1 high).

Pound – 1.5450

Initial support at 1.5408 (Dec 14 low) followed by 1.5337 (Dec 19 low). Initial resistance is now at 1.5600 (Dec 27 high) followed by 1.5692 (Dec 28 high).

Australian Dollar – 1.0080

Initial support at 1.0052 (Dec 21 high) followed by the 0.9861 (Dec 15 low). Initial resistance is now at 1.0225 (Dec 9 low) followed by 1.0380 (Dec 8 high).

Gold – 1555

Initial support at 1560 (Sept 26 high) followed by 1522 (Jul 7 low). Initial resistance is now at 1616 (Dec 22 low) followed by 1642 (Dec 14 high).

Oil – 99.70

Initial support at 98.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 100.00 (Intraday resistance) followed by 101.50 (Intraday Resistance).

Written by Anthony Darvall