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Wednesday, 29 Dec 2010

Safe-Haven CHF under Review with KOF Report Today

The release of the M3 Money Supply report today at 9:00 GMT could help boost the EUR in today's early morning hours if the report reveals a growth beyond expectations; suggesting growth in spending and investment, as well as inflation. The KOF Economic Barometer out of Switzerland at 9:30 GMT should also drive volatility among the CHF pairs in today's thin market conditions.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddownnonoupupdown
Weekly Trendnodowndowndownupup
Resistance1.32071.548283.090.95931.01930.8600
1.31841.546582.880.95711.01710.8582
1.31551.543282.570.95401.01400.8551
Support1.30951.537181.950.94801.00800.8491
1.30641.534281.640.94511.00510.8462
1.30461.532281.460.94301.00300.8440

Economic News

USD - US Dollar Sees Sharp Rebound against EUR

The US dollar's rapid rebound against the euro yesterday appears to have been offset by the moderate losses it experienced elsewhere. The USD/CHF hit a record low price of 0.9433 due to the growth of the franc's appeal as a hedge against year-end market maneuvering.

The EUR/USD made distinct gains as the euro gained appeal during the thin, post-holiday market environment. A surprisingly low consumer confidence report out of the United States yesterday also pushed traders back into safe-havens as part of a year-end portfolio adjustment. The USD, JPY and CHF gained as a result.

With very little news expected out of the United States today, traders appear to be gearing up for another day of thin trading and volatile market movements. The USD may not factor as a central currency in today's market as traders will likely be paying closer attention to the M3 Money Supply report out of the euro zone and the KOF report from Switzerland at 9:00 and 9:30 GMT, respectively.

EUR - EUR Mildly Bearish on Risk Aversion

The EUR gained somewhat Tuesday during Asian and European trading hours, but appears to have experienced a minor correction against the majors during New York hours. The gains experienced Monday appear to have been short-lived as the EUR now seems to be lower against most of its currency counterparts.

Against the British pound (GBP), the 16-nation single currency flattened out, falling mildly from just over 0.8540 to a current price of 0.8526. After surging to as high as 1.3273 against the USD yesterday, the EUR/USD rapidly pared its gains during New York trading hours to a price near 1.3128 on a return of risk aversion late in the trading day.

The release of the M3 Money Supply report today at 9:00 GMT could help boost the EUR in today's early morning hours if the report reveals a growth beyond expectations; suggesting growth in spending and investment, as well as inflation. The KOF Economic Barometer out of Switzerland at 9:30 GMT should also drive volatility among the CHF pairs in today's thin market conditions.

JPY - Year-End Covering and Thin Markets Boost JPY Demand

The Japanese yen received a boost in trading these past few days as multiple market forces combined to increase demand for the island currency. Continued debt concerns in Europe, tensions on the Korean peninsula, and less-than-satisfying figures from the US yesterday have added to the risk-averse atmosphere experienced these past few weeks, providing support for the JPY.

Additionally, thin market trading conditions experienced due to the holiday season in Europe, the US, and elsewhere, has combined with year-end portfolio covering and positive industrial figures to incentivize a return to the yen in short- to medium-term trading. The USD/JPY has fallen slightly to 82.27 from 82.53 in yesterday's New York trading hours.

Crude Oil - Harsh Winter Drives Heating Prices Higher, Crude at $91.40

The short-term weakness to the US dollar against its primary rival, the euro, helped drive commodity prices higher. A boost to heating demand added to the bullish run in crude oil yesterday, with prices reaching above $91.40, just below a 26-month high.

The sudden blanket of snow which covered the American northeast over the last few days has pushed heating oil demand beyond expected levels for short-term investment. Traders took this as a sign to buy into oil futures and drive prices higher.

Technical News

EUR/USD

Many indicators on this pair appear to be floating in neutral territory. The Bollinger Bands on the daily chart look to be tightening in anticipation of a volatile movement, but direction at this point seems unclear. Traders may want to be cautious with trading this pair prior to the end of 2010 as high volatility is expected.

GBP/USD


The Relative Strength Index (RSI) on the daily chart appears to have just entered the over-sold region, suggesting bullish pressure. The daily Williams Percent Range also looks to be over-sold. An impending bullish cross on the weekly Stochastic (slow) adds-up to a bullish forecast for this pair. Traders may want to go long today.

USD/JPY

A fresh bullish cross on the daily Stochastic (slow) suggests an imminent bullish correction to this pair's recent downturn. The daily Williams Percent Range shows the pair ascending out of the over-sold region as well, supporting the bullish notion. Going long appears preferable today.

USD/CHF

After touching the lower border of the daily chart's Bollinger Bands, this pair now appears to be bouncing off its support line at 0.9500 and turning bullish. The daily Williams Percent Range seems to be exiting the over-sold territory, indicating added bullish momentum. Going long with tight stops may be a wise tactic today.

The Wild Card

GBP/CHF

The persistent bearish trend of this pair appears to have recently pushed its technical indicators into displaying a possible bullish correction. The daily Williams Percent Range and RSI both show the pair as over-sold, and the weekly Stochastic (slow) appears to be displaying a fresh bullish cross. Forex traders may take these signals as highlighting the growing bullish pressure building under this pair's recent movement and go long with tight stops to catch the swing for great short-term profits.

Current Time: 10/01 13:35 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/01
14:45USD+ Final Manufacturing PMI57.958.057.51
15:00USD+ ISM Manufacturing PMI58.056.856.65
15:00USD+ Construction Spending m/m1.8%0.5%-0.8%1
15:00USD+ ISM Manufacturing Prices58.058.659.55
15:30USD+ Crude Oil Inventories-4.3M0.6M-3
00:50JPY+ Monetary Base y/y40.5%38.9%-1
10/02
01:00NZD+ ANZ Commodity Pricesm/m-3.3%*-1
01:00AUD+ HIA New Home Salesm/m-5.7%*-1
01:00EUR+ Spanish 10-y Bond Auction2.27|1.8*-1
01:00EUR+ French 10-y Bond Auction1.32|2.8*-1
02:30AUD+ Building Approvals m/m2.5%1.1%-5
02:30AUD+ Trade Balance-1.36B-0.78B-5
04:45JPY+ 10-y Bond Auction0.52|3.6*-1
06:15AUD+ RBA Annual Report***1
08:00EUR+ Spanish Unemployment Change8.1K31.3K-3
09:30GBP+ Construction PMI64.063.7-5
10:00EUR+ PPI m/m-0.1%-0.2%-1
12:30USD+ Challenger Job Cuts y/y-20.7%--1
12:45EUR+ Minimum Bid Rate0.05%0.05%-5
13:30EUR+ ECB Press Conference***5
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