EURO lifted on strong Commodities

  • U.S. Dollar Trading (USD) lost ground against most of the majors as commodities rebounded and the market gained a hint of optimism. US October Whole Sale Inventories dropped 1.1% as lower petrol costs filtered through the economy. Helping the markets mood was the hope that US Auto bailout was in its final stages and focus on global stimulus packages softening the hard economic downturn. In U.S. share markets, the NASDAQ was up 18 points (1.17%) and the Dow Jones was up 70 points (0.81%). Crude Oil closed up $1.45 ending the New York session at $43.52 per barrel. Looking ahead, Weekly Jobless Claims are seen at 530K vs. 509K previous. Also released October Trade balance expected at -53.5 vs. -56.47bn previously.

  • The Euro (EUR) finally broke through the 1.3000 level as commodities extended their rally and the USD was broadly weaker. Above 1.3000 has been hard to maintain though in recent times so the market is hesitant to be too aggressive above the key level. EUR/GBP tested resistance at .8800 as the Euro outperformed other majors. Overall the EUR/USD traded with a low of 1.2905 and a high of 1.3069 before closing the day at 1.3020. Looking ahead, ECB Bulletin released.

  • The Japanese Yen (JPY) had another volatile day with the market buying up the crosses and the USD/JPY from lows as the Nikkei made good gains and the market mood improved. Stalling at the highs in Europe saw the downside come back into view and the market aggressive traded the range. October Machine Orders -3.9% vs. 5.5% expected. Overall the USDJPY traded with a low of 91.96 and a high of 93.06 before closing the day around 92.20 in the New York session.

  • The Sterling (GBP) gained but was relatively constrained as the market still has very little appetite to aggressively buy the pound. 1.4800 is proving a pivot point that the market is orbiting in recent days. Overall the GDP/USD traded with a low of 1.4739 and a high of 1.4880 before closing the day at 1.4830 in the New York session. Looking ahead, December CBI orders are seen falling to -44 vs. -38 previously.

  • The Australian Dollar (AUD) was buoyant but traded in a tight range as traders took profit above 0.6600. Underpinning the move higher was the increase in Consumer Confidence and large gains in Commodities. The market is wary of getting too long as stock market rallies have been unsustainable lately and this could lead to AUD selling. Overall the AUD/USD traded with a low of 0.6523 and a high of 0.6640 before closing the US session at 0.6570. UPDATE November Unemployment -15.6K vs. -15K expected, Unemployment rate 4.4% vs. 4.5% expected.

  • Gold (XAU) made large gains as Oil rallied and the USD weakened. $800 has proved a pivotal level in the past few months of trading. Overall trading with a low of USD$775 and high of USD$813 before ending the New York session at USD$809 an ounce.

TECHNICAL COMMENTARY

Chart

  • Euro – 1.3015

Initial support at 1.2905 (Dec 10 low) followed by 1.2797 (Dec 9 low). Initial resistance is now located at 1.3070 (Dec 10 high) at followed by 1.3080 (Nov 25 high)

  • Yen – 92.65

Initial support is located at 91.94 (Dec 9 low) followed by 91.59 (Dec 5 low). Initial resistance is now at 93.07 (Dec 9 high) followed by 93.91 (Dec 8 high).

  • Pound – 1.4820

Initial support at 1.4736 (Dec 10 low) followed by 1.4679 (Dec 9 low). Initial resistance is now at 1.4915 (Dec 9 high) followed by 1.5047 (Dec 8 high).

  • Australian Dollar – 0.6570

Initial support at 0.6522 (Dec 10 low) followed by the 0.6453 (Dec 8 low). Initial resistance is now at 0.6696 (Nov 14 high) followed by 0.6758 (Nov 11 high).

  • Gold – 804

Initial support at 763 (Dec 9 low) followed by 754 (Dec 8 low). Initial resistance is now at 813 (Dec 10 high) followed by 830 (Nov 25 high).