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Market View for Dec 11.

Thu, Dec 11 2008, 00:26 GMT
by James Whyte

ForexAmericas

Stocks finished marginally higher after Europe was more or less unchanged.  Financial stocks took a bit of a hit today, along with some retailers.  Oil closed above $44 as Iran said it will begin storing oil and Russia begins to talk about output cuts.  The U.S. Dollar index fell .6% today.  U.S. automakers fell on news that their bailout plan may meet resistance in the Senate.  More analysts forecast a 50 basis point cut when the Fed meets on Dec. 16th.  The Pound continued its slide against the Euro as the Chancellor of the Exchequer said policy makers should not use interest rates to support the currency.  This supports our continued bearish view on Sterling.

Our Focus Today:

GBP:  Sterling was held to a 100 point range against the Dollar overnight, but we continue to hold our bearish view, and we expect it to continue its down-trend.  Resistance still held in the mid 1.48’s as predicted. We would stay short for 1.4550-1.4600 initially.  Darling’s comments should prove to re-energize short selling in Sterling, especially against the Yen. 

JPY:  The Japanese Yen is still our favorite currency, and although USD/JPY ended marginally higher, and we like the low 93’s as a top.  GBP/JPY should be a great sell, and we look to establish shorts ahead of 138.50.

EUR:  Euro seems to be holding well above 1.3000, after reaching a high of 1.3070 overnight.  Some analysts are calling for continued rebound of EUR/USD, but until we clear November 25/26 highs of 1.3080, we are still sellers on rallies.  A good break of the 1.3080-1.3120 level should see us back to 1.3300.  Europe is still in trouble, both internally and externally, so we do not see a reason to change our view for now.  EUR/GBP moved higher as the markets continue to understand the critical condition of the U.K. economy, even in comparison to Europe.  

Published on  Thu, Dec 11 2008, 00:27 GMT