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EUR/USD Breaks 1.3000
U.S. Dollar Trading (USD) the USD did well as stock markets fell for a third day and safe haven demand for the worlds reserve currency continued to be strong. Very large drops in Oil on the back of OPEC decision to increase production added to the Dollar strength. In US stocks, DJIA -131 points closing at 11823, S&P -13 points closing at 1212 and NASDAQ -39 points closing at 2539. Looking ahead, Weekly Jobless Claims forecast at 390k vs. 391k previously. Also November Industrial Output forecast at 0.2% vs. 0.7% previously.
The Euro (EUR) yields continued to edge higher in Europe with Italian and Spanish debt both moving closer to the 7% level seen as the tipping point. EUR/USD broke below 1.3000 but the market did find support at 1.2950 and settled into a tight range for the rest of the day. EUR/GBP broke below 0.8400 as the downtrend continued. Looking ahead, November Inflations forecast at 0.1% vs. 0.3% m/m previously. Also December PMI services forecast at 47 vs. 47.5 previously. SNB Rate Meeting forecast to hold at 0.25% but focus on any EUR/CHF talk.
The Japanese Yen (JPY) USD/JPY broke above Y78 but had little follow through with the market slowly grinding higher as the Dollar outpaces the Yen. EUR/JPY is under a lot of pressure with the debt crisis pushing the cross towards Y100 hitting Y101.10 overnight. The outlook for the Japanese economy is weak with recent Thai floods hurting big companies. UPDATE Q4 Tankan -4 vs. 2 previously.
The Sterling (GBP) the GBP/USD finished unchanged in light trade with EUR/GBP selling supporting. Cable found support at 1.5400 and the market is sitting just under 1.5500. The outlook is still negative with recent economic data disappointing. November Claimant Count came in lower than expected at 3k vs. 16k forecast. The Unemployment Rate stayed at 8.3%. Looking ahead, November Retails Sales forecast at -0.3% vs. 0.6% previously m/m.
The Australian Dollar (AUD) The AUD/USD followed stocks and Oil lower hitting 0.9900 overnight with buyers sitting on the sidelines while the EU debt crisis continues. The longer term outlook is more mixed with the RBA cutting rates and economic data softening both locally and in China. Consumer Sentiment slumped in December to -8% vs. 6.3% previously.
Oil & Gold (XAU) Gold Broke $1600 as the sharp selling continued for a third day. Crude Oil fell over 5% as the first OPEC move in 3 years saw production increased.
Pairs to watch
EUR/USD Selling done or just beginning?
XAU/USD Oversold will investors come back to Gold?
Euro – 1.2990
Initial support at 1.2962 (Jan 12 low) followed by 1.2867 (Jan 10 low). Initial resistance is now located at 1.3146 (Oct 4 high) followed by 1.3386 (Dec 5 high)
Yen – 78.10
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 78.42 (Nov 2 high).
Pound – 1.5470
Initial support at 1.5423 (Nov 25 low) followed by 1.5272 (Oct 6 low). Initial resistance is now at 1.5532 (Dec 14 high) followed by 1.5662 (Dec 12 high).
Australian Dollar – 0.9905
Initial support at 0.9833 (76.45 retrac of 0.9664-1.0380) followed by the 0.9742 (Nov 28 low). Initial resistance is now at 1.0031 (Dec 13 low) followed by 1.0225 (Dec 9 high).
Gold – 1580
Initial support at 1550 (Oct 20 high) followed by 1500 (Oct 4 low). Initial resistance is now at 1622 (Dec 13 low) followed by 1677 (Dec 13 high).
Oil – 95.00
Initial support at 94.00 (Intraday Support) followed by 92.50 (Intraday Support). Initial resistance is now at 96.00 (Intraday resistance) followed by 98.00 (Intraday Resistance).
Written by Anthony Darvall