Fed Unveils $800B Consumer Loan Program

  • U.S. Dollar Trading (USD) came under pressure after details emerged of a new FED program that will buy $800 billion in GSE mortgage backed debt and offer another $200 Billion in a new program designed to offer support to the consumer loan backed asset market. US shares reacted well and shrugged off the Q3 GDP numbers of -0.5%. Also released Consumer Confidence in November rose to 44.9 vs. 38 expected.  In U.S. share markets, the NASDAQ was down 7 points (0.5%) and the Dow Jones was up 36 points (0.43%). Crude Oil closed down $3.73 ending the New York session at $50.77 per barrel. Looking ahead, October Durable Goods Orders are expected at -3% vs. +0.9% last month. Also released, October New Homes Sales expected to fall to 445K vs. 464K previously.

  • The Euro (EUR) staged an aggressive rally on the back of USD selling after the new Fed plan was released. When the stock rally stalled EUR/JPY selling started to weigh on the single currency but still managed to close above 1.30. German GDP was confirmed at -0.5% in Q3 and Consumer Confidence beat expectations at 2.2 vs. 1.5 forecast. Overall the EUR/USD traded with a low of 1.2805 and a high of 1.3081 before closing the day at 1.3060.

  • The Japanese Yen (JPY) had a mixed day gaining against the USD but losing ground against the EURO and GBP as there respective majors gained heavily. AUD/JPY also underperformed falling heavily from highs early in the day as commodities fell and equities stalled. Overall the USDJPY traded with a low of 94.96 and a high of 96.92 before closing the day around 95.20 in the New York session.

  • The Sterling (GBP) extended the recovery envelope even after BoE’s King had very dovish things to day about the UK economy. King’s comment included the possibility of a severe recession looming in the UK. 1.5000 was tested before USD weakness lead to a massive rally up to 1.5500 highs. Overall the GDP/USD traded with a low of 1.4985 and a high of 1.5535 before closing the day at 1.5480 in the New York session.

  • The Australian Dollar (AUD) rally came unstuck as selling above 65 emerged early in the Asian session. Less than expected gains from Asian equities pressure the AUD/JPY lower but as the EURO and GBP surged the AUD/USD got a second wind and 0.6600 was scaled for a brief moment before falling back to .6450 supports. Overall the AUD/USD traded with a low of 0.6333 and a high of 0.6617 before closing the US session at 0.6510.

  • Gold (XAU) continued to be well supported although heavy falls in Oil kept gains into the $800’s limited. Overall trading with a low of USD$803 and high of USD$831 before ending the New York session at USD$821 an ounce.

TECHNICAL COMMENTARY

Chart

  • Euro – 1.3020

Initial support at 1.2804 (Nov 25 low) followed by 1.2568 (Nov 24 low). Initial resistance is now located at 1.3081 (Nov 25 low) at followed by 1.3116 (Nov 5 high)

  • Yen – 95.00

Initial support is located at 94.94 (Nov 24 low) followed by 93.62 (Nov 20 low). Initial resistance is now at 97.43 (Nov 25 high) followed by 97.55 (Nov 17 high).

  • Pound – 1.5400

Initial support at 1.4984 (Nov 25 low) followed by 1.4841 (Nov 24 low). Initial resistance is now at 1.5500 (Key level) followed by 1.5535 (Nov 25 high).

  • Australian Dollar – 0.6465

Initial support at 0.6298 (76.4% retrace 0.7015 to 0.6076) followed by the 0.6232 (Nov 24 low). Initial resistance is now at 0.6618 (Nov 25 high) followed by 0.6696 (Nov 14 high).

  • Gold – 813

Initial support at 786 (Nov 24 low) followed by 743 (Nov 21 low). Initial resistance is now at 856 (Oct 15 high) followed by 871 (Oct 13).