U.S. Dollar Trading (USD) stocks fell back mildly and the Dollar lost ground in quiet trade as commodities rebounded. Earning Season has begun in the US with nightly focus on earnings report set to move the stock markets and currencies. In US stocks, DJIA -37 points closing at 11637, S&P -1 points closing at 1271 and NASDAQ +4 points closing at 2707. Looking ahead, November Wholesale Inventories are forecast at 1 vs. 1.9 previously.

The Euro (EUR) French and German officials deny they are putting pressure on Portugal to accept a bailout package but bond yields are still remaining high and the market is continuing to be supported by the ECB. January Sentix improved to 10.6 vs. 9.7 previously. EUR/USD traded with a low of 1.2873 and a high of 1.2968 before closing at 1.2930. Looking ahead, ECB President Trichet Speaks.

The Japanese Yen (JPY) was slightly lower under Y83 but the market is undecided on future direction with US Bond Yields the major catalyst for recent moves and risk on or off moving the Yen crosses. Overall the USDJPY traded with a low of 82.65 and a high of 83.30 before closing the day around 82.85 in the New York session.

The Sterling (GBP) tested support at 1.5500 and then resistance at 1.5600 as range trading continued. UK Halifax House Prices fell -1.3% in December and continues a string of recent bad data. Inflation in 2011 will be key for GBP strength or weakness. Overall the GBP/USD traded with a low of 1.5473 and a high of 1.5606 before closing the day at 1.5585 in the New York session.

The Australian Dollar (AUD) tested below 0.9900 with the market struggling to maintain strength and starting to be sold on rallies. Devastating floods are undermining sentiment towards the risk currency although stock market movements should continue to be the major cause of movements going forward. Overall the AUD/USD traded with a low of 0.9881 and a high of 0.9985 before closing the US session at 0.9940.

Oil & Gold (XAU) was very contained orbiting around the $1370 level. Overall trading with a low of USD$1364 and high of USD $1376 before ending the New York session at USD$1375 an ounce. Crude Oil found strength on news that an Alaskan pipeline was shutdown. WTI Oil Closed +$1.00 at $89.40 a barrel.



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2796

1.2830

1.2920

1.3021

1.3170

USD/JPY

81.89

82.88

82.95

83.68

84.11

GBP/USD

1.5367

1.5407

1.5550

1.5580

1.5665

AUD/USD

0.9830

0.9863

0.9880

1.0015

1.0076

XAU/USD

1335.00

1351

1374

1385

1417

OIL/USD

86.00

88.00

89.40

90.00

91.50





Euro - 1.2920

Initial support at 1.2830 (Sep 14 low) followed by 1.2796 (61.8% retrace of 1.1877-1.4282). Initial resistance is now located at 1.3021 (Jan 6 high) followed by 1.3325 (Jan 5 high)



Yen - 82.95

Initial support is located at 82.88 (Jan 6 low) followed by 81.89 (Jan 5 low). Initial resistance is now at 83.68 (Jan 7 high) followed by 84.11 (Dec 20 high).

Pound - 1.5550

Initial support at 1.5407 (Jan 7 Low) followed by 1.5367 (Dec 30 low). Initial resistance is now at 1.5580 (Jan 7 high) followed by 1.5665 (Dec 31 high).

Australian Dollar - 0.9880

Initial support at 0.9863 (Dec 20 low) followed by the 0.9830 (Dec 16 low). Initial resistance is now at 1.0015 (Jan 6 high) followed by 1.0076 (Jan 5 high).

Gold - 1374

Initial support at 1351 (Nov 26 low) followed by 1335 (Nov 18 low). Initial resistance is now at 1385 (Jan 5 high) followed by 1417 (Jan 4 High).

Oil - 89.40

Initial support at 88.00 (Intraday Support) followed by 86.00 (Intraday Support). Initial resistance is now at 90.00 (Intraday Resistance) followed by 91.50 (Intraday Resistance).





Written by Anthony Darvall