Overall, the dollar strengthened across the board since the new week started, driven by risk aversion. However, the market moved with a lack of volume, and on weak momentum because of the light economic calendar. Momentum may pick up later, during the U.S open.

The Euro (Eur/Usd) fell a little over 100 pips during the overnight session, and managed to find a bottom near the 1.3300 area. The pair also bottomed last week at the same level, making it a reliable support level. In addition, the 61.8% retrace of the euro's trend from November to December is located in this area.

The Pound (Gbp/Usd) traded within a defined range in the Asian session, holding above TheLFB S1 (1.5065). However, after the London open, the pair broke lower and fell 90 pips, near the second support area and very close of the 20-day moving average. The sentiment around the pound remains very bearish, as the economy is forecast to enter the steepest contraction since the early 1990's.

The Aussie (Aud/Usd) fell 100 pips overnight, as the market is being driven by risk-aversion. The aussie managed to break below the 20-day moving average in the European session, but now it will need some strong selling orders to be able to close under it. It is the first time in one month that the aussie breaks below the 20-day moving average.

The Cad (Usd/Cad) advanced 70 pips overnight, after it opened with a 50-pip gap due to the weekend trading. The pair is heading towards the high reached on Friday and towards the 1.20 area, the resistance level of the last few days. The Canadian dollar moves were correlated with the oil overnight, both being sold.

The Swissy (Usd/Chf) rose 100 pips since the Sunday session started. However, the pair moved without any momentum overnight, and currently the pair is trading near the 1.20 area, an important resistance area. The pair will have to gain more momentum to break higher.

The Yen (Usd/Yen) moved in a tight channel overnight. The pair traded around the Asian open price, in a 20-pip range above the 90.00 level. The yen is currently trading below all the moving averages, after it was sold in the last few days.

Markets Head Lower, As Risk Aversion Returns

Current Futures: Dow +1.00, S&P -0.60, NASDAQ -0.50

European Trade: Overnight markets headed lower, as it looks like traders are again focusing on the real economy. Asian markets closed lower for the third consecutive day, while the European major indexes are heading towards their fourth. U.S. futures were little changed overnight.

In Europe, governments take on special measures to fight the credit crunch and the rising wave of unemployment. In Holland, the Dutch government offered a special program for companies that had a significant drop in their business. Authorities will support a major part of the payroll of the persons who otherwise would have been fired. This decision helps the unemployment rate remain low, and avoids any significant shock for the labor market. In addition, the government stays away from any other costs resulting from unemployed persons, like benefits and the costs of training for a second career.

In the U.K., the government decided to pay employers to recruit and train people or to advise them to start their own business. The government would fund 75.000 training places, costing £500 million over the next two years. The measure is only a part of the U.K. stimulus plan, but it aims directly at the labor market, which is something very well regarded.

Tonight, the Nikkei was closed for business. The Australian S&P/Asx fell 52.40 points (1.40%) to 3,683.30. In Europe, the U.K. fell 9.00 points (0.20%) to 4,439.50, while the German Dax lost 7.00 points (0.15%) to 4,806.00

Crude oil is holding above the $40 benchmark. Crude oil for January delivery fell $0.60 to $40.10.

Gold bounced off the 200-day moving average. Bullion for immediate delivery gained $2.10 to $852.60.

Previous Asian trade: Asian stocks opened lower for the third consecutive day, after very poor reports came out of the U.S. economy. However, the Nikkei was sheltered from any losses, since the index is closed for business.

Equity markets in Asia opened lower, trailing close were the U.S. markets on Friday. Back then, a release showed that the unemployment rate jumped four basis points, to 7.2% in December, while the economy shed another +500 jobs. The total number of job losses in 2008 reached 2.5 millions, the most since World War II. Furthermore, the unemployment rate is forecasted to go as high as 8.5% in 2009, in July the rate was reported at 5.8%.

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