Overall, the dollar continued to flex its muscles into the European session, although market moves have been strained in the last two sessions. Most of the majors are standing near important support or resistance areas, as traders await the market to establish solid direction and initiate some breakouts.
The Euro (Eur/Usd) struggled to break below the 1.3550 area in the overnight session, which is an important intra-day swing point. However, the euro managed to break below the 100-day moving average during the European session. Lately, the euro sentiment has turned negative, with analysts saying that the ECB is behind the curve.
Consumer confidence in the Euro-area fell to -30, the lowest read since the index first started. The very poor read points to a very clear contraction in the Euro-area. he unemployment rate in the Euro-area rose to 7.8%, in-line with the market expectations. The unemployment rate for the month of October was left unrevised at 7.7%. About 12.180 million persons were unemployed in the Euro-area, up by 202K from one month earlier. The German trade balance surplus fell down to 10.7B in November, the lowest level reached since June 2003.
The Pound (Gbp/Usd) traded along side the neutral pivot point during the overnight session, as later in the day the Bank of England is expected to cut interest rates by 50 basis points, to the lowest rate on record. Furthermore, some say the bank may cut more than expected. Since the Sunday open, the pair had gained approximately 550 pips, but has currently topped at the 50-day moving average.
The Aussie (Aud/Usd) tumbled 150 pips during the overnight session, in-line with the commodity market, which are Australia's biggest exports. The pair is now trading trapped between the 100-day simple moving average, from which the pair bounced one day earlier, and the 20-day SMA.
The Australian construction sector decreased to 30.9 in December from a flat 32.0 reading the previous month. During the month, firms continued to be severely affected by the financial and economic crisis as well as deteriorating demand as new projects stalled. The building approvals from Australia fell a seasonally adjusted 12.8 percent, month over month, in November. This was against expectations for a relatively mild decline of 1.4 percent. Australia has posted a lower than expected trade balance for the month of November. In seasonally adjusted terms, the surplus was A$1.45 billion; this is a decrease from October's A$2.95 billion
The Cad (Usd/Cad) rose a large number of pips during the overnight session, as a consequence of oil's decline. The pair gained 120 pips, breaking above TheLFB R1 (1.2030). Currently, the cad is testing the 1.2050 area, which has acted as strong support in the past, but has now become resistance.
The Swissy (Usd/Chf) is currently testing the 20-day moving average, after it gained 50 pips overnight. The swissy initially moved lower during the early European session, but soon reversed the moves. The current level, 1.1050 has acted as a strong swing point in the past.
In December, the Swiss CPI read shows that the pace of inflation is slowing from the high reached in July of 3.1%. The released number of -0.5%, is slightly higher than the forecasted rate of -0.4%. The year-over-year read fell down to 0.7%, while one year ago, inflation was standing at 2%. In December, unemployment in Switzerland rose to 2.8%, as expected. In unadjusted terms the Swiss unemployment jumped to 3.0% in December, from 2.7% in the period before
The Yen (Usd/Yen) fell 110 pips overnight, just below TheLFB S1 (91.90). This comes after the last few days saw the pair unable to break above the 50-day moving average, on very strong volume. The next support area lies near the 91.00 level.