â€¢ U.S. Dollar Trading (USD) rose to seven week high against the Euro and was able to rally against a number of other majors, all but the sterling pound. The moves were attributed to easing concerns that the worst housing slump in 16 years would cause an economic recession, hence also reducing the likelihood of the Federal Reserve cutting rates as early as next month. In data specific news, TIC flows for the month of October were well above expectations coming in at 97.8 bln (previous was revised lower to -32.8 bln), whilst the currency was also boosted by the Current Account (Q3) coming well above of consensus at 178.5 bln (Forecast: -183 bln; Prior: -189R). Any further moves were capped with NY Fed Manufacturing coming lower than expectations. In U.S. share markets the NASDAQ was down by -169.70 (-1.75%) whilst the Dow Jones was also down by -172.65 (-1.29%). Crude oil was lower by US$0.60 a barrel to US$90.67. Housing starts appears to be key data release out of the US on Tuesday as the housing sector continues to be the hottest topic in 2007.
â€¢ The Euro (EUR) traded at a seven week low on Monday, as the dollar continues its December rally. In Euro data, PMI Manufacturing was on forecasts at 52.5 whilst PMI services was slightly short of expectations at 53.2 (Forecast: 53.9). The EURUSD traded with a low of 1.4330 and a high of 1.4453 before closing the day at 1.4394 in the New York session. Trade Balance data the key out of the EZ on Tuesday.
â€¢ The Japanese Yen (JPY) was range bound on Monday. Compared to a number of the other majors, the JPY was stable against the USD trading with a range of a low 112.83 and a high of 113.48, before closing the session at 113.02 in New York.
â€¢ The Sterling (GBP) was the best performing of all the majors on Monday, tracing the USD. The GBPUSD traded with a low of 2.0103 and a high of 2.0226 before closing the session at 2.0214 in the New York session. UK CPI data for the month of November is expected to rise to 2.2&% from the previous 2.1%
â€¢ The Australian Dollar (AUD) tracked other majors falling below key 86cent levels. The AUDUSD traded with a low of 0.8559 and a high of 0.8659 before closing the session at 0.8582 in New York.
â€¢ Gold (XAU) was also range bound trading with a low, trading with a low of 785.80 and a high of 798.75.
â€¢ Euro â€“ 1.4400
Initial support at 1.4331 (Dec 17 low) followed by 1.4307 (1.4751 minus 1.4968 â€“ 1.4528). Initial resistance is now located at 1.4527 (Dec 6 low) followed by 1.4658 (Dec 14 high).
â€¢ Yen â€“ 112.95
Initial support is located at 112.23 (Dec 14 low) followed by 111.42 (Dec 13 low). Initial resistance is now at 113.85 (61.8% retracement of the 117.95 to 107.23 decline) followed by 113.89 (Nov 8 high)
â€¢ Pound â€“ 2.0195
Initial support at 2.0102 (Dec 17 low) followed by 2.0086 (Sep 25 low). Initial resistance is now at 2.0448 (Dec 14 high) followed by 2.0484 (Dec 13 high)
â€¢ Australian Dollar â€“ 0.8575
Initial support a 0.8558 (Dec 17 low) followed by 0.8538 (38.2% retracement of the 0.7676 to 0.9400 advance). Initial resistance is now at 0.8654 (Nov 21 low and former rang low) followed by 0.8795 (Dec 14 high)
â€¢ Gold â€“ 795.80
Initial support at 785.50 (Dec 17 low) followed by 777.20 (Dec 3 low). Initial resistance is now at 812.20 (Dec 13 high) followed by 817.20 (December 12 high)