U.S. Dollar Trading (USD) negative sentiment for most of the trading day was reversed in the US session after October Retail Sales came in at 0.5% vs. 0.3% forecast m/m. This is the fifth month that retail sales have come in positive and show the US economy at least from a consumption point of view is not as weak as first thought. Some banks upgraded their expectations of Q4 GDP after the figures were released. In US stocks, DJIA +17 points closing at 12096, S&P +6 points closing at 1257 and NASDAQ +28 points closing at 2686. Looking ahead, October CPI forecast at 0.0% vs. 0.3% previously. October Industrial Output forecast at 0.4% vs. 0.2% previously.

The Euro (EUR) Italian debt spiked above 7.0% and the EUR/USD fell to 1.3500 on reports on new Italian PM struggling to gain consensus on new Austerity measures. The Market bounced in the US session as stocks reversed direction and sentiment improved on solid US economic numbers. The crisis is not over but the ECB is supporting the bond market stopping things from getting out of control and the Euro crashing. Looking ahead, October CPI forecast at 3.0% y/y unchanged from last month.

The Japanese Yen (JPY) the USD/JPY spiked in the Asian session to Y77.50 as the market spooked the BOJ was intervening. The major trade back to Y77 very quickly after no confirmation came out and the pair spent the rest of the day in a tight range. EUR/JPY is adding to the downside pressure on most crosses and if things unravel in the Eurozone the BOJ may have to intervene to stop Yen strength. Looking ahead, BOJ Rate Annoucement forecast to hold at 0.1% vs. 0.1%

The Sterling (GBP) October CPI fell to 5.0% vs. 5.1% forecast and allowed the GBP/USD to ease with the Euro down to a new support at 1.5800. The pound will follow the Euro direction but at a slower pace with EUR/GBP currently falling as the Eurozone debt crisis rolls on. EUR/GBP tested the 0.8520 level but closed unchanged near 0.8560. Looking ahead, October Claimant Count forecast at 20k vs. 17.5k previously.

The Australian Dollar (AUD) fell in sympathy with the Euro during the European session as Italian debt fears continued to cause risk aversion. The AUD/USD found support at 1.0120 and bounced back to opening levels as US data and stocks reversed direction. The Italian debt situation could cause the AUD/USD to test 1.000 but if confidence comes back then the Aussie will lead on the way back up.

Oil & Gold (XAU) Gold tested $1760 before rebounding to $1780 as buyers took control. Oil Resumed its uptrend break back above $99 a barrel with US data supporting.

Pairs to watch

EUR/USD Italian Debt to climb further today?

USD/JPY BOJ to help weaken Yen today?

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3346

1.3484

1.3520

1.3641

1.3814

USD/JPY

75.35

76.34

77.05

77.29

77.68

GBP/USD

1.5681

1.5754

1.5810

1.5932

1.6096

AUD/USD

1.0052

1.0106

1.0160

1.0227

1.0350

XAU/USD

1728.00

1736

1779

1802

1816

OIL/USD

95.00



97.00

99.30

100.00

101.00

Euro - 1.3520

Initial support at 1.3484 (Nov 10 low) followed by 1.3346 (Oct 10 low). Initial resistance is now located at 1.3641 (Nov 15 high) followed by 1.3814 (Nov 14 high)



Yen - 77.05

Initial support is located at 76.34 (76.4% retrace of 75.35-79.53) followed by 75.35 (Oct 31 low). Initial resistance is now at 77.29 (Nov 14 high) followed by 77.68 (Nov 11 high).

Pound - 1.5810

Initial support at 1.5754 (Oct 21 low) followed by 1.5681 (Oct 20 low). Initial resistance is now at 1.5932 (Nov 15 high) followed by 1.6096 (Nov 14 high).



Australian Dollar - 1.0160

Initial support at 1.0106 (Nov 11 high) followed by the 1.0000 (Round Number). Initial resistance is now at 1.0227 (Nov 15 high) followed by 1.0350 (Nov 14 high).

Gold - 1779

Initial support at 1736 (Nov 11 high) followed by 1728 (61.8% retrace of 1681.73-1802.93). Initial resistance is now at 1802 (Nov 8 high) followed by 1816 (Sep 21 high).



Oil - 99.30

Initial support at 97.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at  100.00 (Intraday resistance) followed by 101.00 (Intraday Resistance).





Written by Anthony Darvall