Major Market Movers

Welcome 2008…

Well dear reader another year has come to an end, and as they say the end is merely a new beginning and that is what we hope to you and the US economy as well. What better way to end our year journey but with data from the tarnished sector in the US shedding over us glimpse of hope, as we need optimism…

The National Association of Realtors released their November figures to sales of previously owned homes which provided a sense of stability rising 0.4 percent on the month to an annualized 5.0 million units, from the upside revised previous of 4.98 million in October. That was probably the push markets needed to just be happy celebrating this eve, while the truth is there is no solid proof that misery has come to an end as expectations are still gloomy for the US in 2008.

The thing better than the rise in sales was the actually inventories of unsold units in the market ticked down 3.6% yet prices are still down 3.3 percent on the year. The disturbing news was the words of NAR Chief Economist Yun as he suggested the Feds make a large one rate cut in January of minimum 50 basis points and preferably 75 basis points rather multiple smaller cuts.

One might wonder does that mean the US is finding shore or that what we have seen is just the tip of the iceberg, tonight is the night were the fed needs to set their resolutions for the year and it should be revolving around two things, be more TRANSPARENT and recruit all means possible to salvage the ECONOMY!

From me to you are sincere wishes of a Happy New Year, enjoy your holiday and make the start good enough to remember for we are about to enter a new era and you need all the energy and mental stability that one can have… ENJOY

Major Technical Analysis

euro

Last Friday, the European currency drove through the upside direction, ending the day with significant signs of an upside wave confirmed with the rounding bottom after the long bearish wave, due to this move the technical oscillators have been affected to show the continuation pattern for the week ahead till the key 1.4880 levels.
The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4570.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect buying Euro above 1.4700 with a target at 1.4820 stop loss below 1.4660.

gbp

The British pound rallied in an upside trend last Friday morning to hit the major resistance level at 2.0020s, then it couldn't progress due to the uncertainty causing a huge sell-off, which in role pressured the pound down ounce again near the opening levels; however, the technical directional indicators still show an upside potential as a progressive pattern.
The trading range for today might be between the key resistance level at 2.0100 and the key support level at 1.9800.
The general trend is up as far as 1.9540 remains intact targets now at 2.0940 and 2.1050.
We expect buying sterling above 1.9945 with a target at 2.0040 stop loss below 1.9890.

jpy

Last week, the US dollar against the Japanese yen fell to the downside since it has gathered enough momentum to break through the strong support level at 113.50 reaching to the next key resistance around 112.20s; in the meantime the pair just breached the miner ascending trend line, hence today, the pair is expected drop down back to the downside direction finishing the upside projection movements.
The trading range for today will be between the key resistance at 113.70 and the key support at 111.00.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 112.55 with a target at 111.50, stop loss above 113.00.

Major Market Movers

Housing Data…2007

As the year 2007 is taking her last breaths, and the year 2008 is just about to be born, markets are putting the final touches on the U.S. economy's grave, with some housing data to be released, and expectations that the housing slump CONTINUED throughout all 2007, and probably will continue in 2008.


The U.S. new home sales probably fell in the month of November to 717,000 units, down 1.6% from October's reading of 728,000 units on an annual base, the decline is expected despite 0.75% rate cuts which took place in the American economy till the beginning of November.

The economical growth is expected to slow down in the 4th quarter of 2007 to 1.0%, all as a result of the housing slump that happened in 2007, while inflation skyrocketed in this particular quarter, now the U.S. economy is in deep crisis if growth actually slowed down considerably, the interest rate decision will be like mission impossible, and the reaction for any decision will not be favored in the markets.

The housing slump has done a great deal of trouble for the economy, not only in America but even worldwide, leading to a huge credit crisis that struck the financial sector all over the world, and drove financial markets into everlasting turmoil.

Today's data along with Monday's will be the finals for this year, and they will carry a great significance, until the release of the advanced reading of GDP in the 4th quarter, new and existing home sales will be the most important.

Let me remind you again dear reader that due to low volumes in the markets the volatility increases, and sometimes the sensitivity to any release increases, as a small number of investors can achieve huge market movements.

Major Technical Analysis

euro

The European currency yesterday rallied also with high levels of volume to pass the major resistance level at 1.4550s and then 1.4600 again to close above 1.4630s. This move came after the euro confirmed the upside direction to set the upside target now at 1.4800 resistance area.
The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4530.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect buying Euro above 1.4610 with a target at 1.4710 stop loss below 1.4560.

gbp

The British pound yesterday further confirmed the bullish trend after the technical oscillators moved to show the bullish pattern; after the pound rallied in a strong pattern to the upside resistance area around 1.9960s, today we expect the pound to progress towards the key resistance level at 2.0080s.
The trading range for today might be between the key resistance levels at 2.0100and the key support level at 1.9850.
The general trend is up as far as 1.9800 remains intact targets now at 2.0940 and 2.1050.
We expect buying sterling above 1.9920 with a target at 2.0045, stop loss below 1.9850.

jpy

The dollar against the Japanese yen tended to move down in a strong move with high levels of volume despite the slight bullish move at the beginning of the trading session; in the meanwhile the technical indicators readjusted to show the downside move until the key support area at 112.80s.
The trading range for today will be between the key resistance at 114.60 and the key support at 112. 20.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 113.85 with a target at 113.00, stop loss above 114.35.

Crosses Technical Analysis

GBP/JPY

The Pound inclined against the Yen as investors resumed their Carry Trades on the Yen, the short term indicators are showing an upside potential for the pair to reach the next target at 227.20s, and the point at 225.81 seems to offer good demand for the pair.

EUR/JPY

The Euro gained against the Yen as well as investors sold the Yen in what is know as the Carry Trades, the short term indicators are showing an upside potential too for the pair to reach the next targets at 167.20s then 168.80s, and the point at 165.19 seems to offer good demand point for the pair.

EUR/GBP

The Euro gained against the Pound to hit the target at 0.7300s but couldn't hold above it, and now even if the short term technical indicators are showing the pair resides in an overbought area yet they are showing an upside potential as well, as the next target is set to be at the 0.7315s level, and the point at 0.7280 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday rallied to the upside since it succeeded in launching the bullish wave, breaking through the major resistance level at 1.450; meanwhile the solid reversal base played a significant role in helping the euro maintain it's upside wave, today we expect the euro to progress the upside trend as well.
The trading range for today might be between the key resistance level at 1.4620 and the key support level at 1.4400.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect buying Euro above 1.4480 with a target at 1.4545 stop loss below1.4440.

gbp

The British pound yesterday traded above the reversal pattern it formed in the past three days and that's despite the low levels of volume; on the other hand the short term technical oscillators pointed to reversal signals with targets at 2.0000 in the upcoming days and it could be a sign for the retracement's end.
The trading range for today might be between the key resistance levels at 1.9950 and the key support level at 1.9750.
The general trend is up as far as 1.9800 remains intact targets now at 2.0940 and 2.1050
We expect buying sterling above 1.9785 with a target at 1.9890, stop loss below 1.9735.

jpy

The dollar against the Japanese yen yesterday fluctuated at the peak of the bullish wave in neutral patterns with low levels of volume reflecting the weakness of the upside move; hence, the pair is expected to start dropping down as it couldn't break through the descending trend line, confirming the technical parameters pattern that pointed out the move last week.
The trading range for today will be between the key resistance at 115.00 and the key support at 113. 00.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 114.45 with a target at 113.60, stop loss above 114.85.

Crosses Technical Analysis

GBP/JPY

Due to the holiday's thin volume, the pair GBPJPY stayed calm, between the 223.80 levels and 227.12, we see another adjustment towards the upside.

EUR/JPY

The Euro is still inclining against all majors, yet with the holidays' thin volume, it looks like its going to stay calm between 164.70 and 167.70, while the wider range is between 162.31 and 164.73.

EUR/GBP

The target at 0.7300 almost met, we don’t expect further hikes above it before the New Year, yet it looks very supported from the downside with a slight possibility to go below 0.7230.

Major Technical Analysis

euro

The European currency moved towards the upside on Monday with slight trading volume due to the holidays; the euro is trying to form a solid base to show some reversal signals for the next step where passing the major resistance level at 1.4420s might lead the euro in a major move towards the upside for the upcoming days.
The trading range for today might be between the key resistance level at 1.4540 and the key support level at 1.4300.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect buying Euro above 1.4380 with a target at 1.4440 stop loss below 1.4340.

gbp

The British pound Monday was trading with the tendency towards the downside which was obvious after the pound breached the major support area at 1.980s; however it reversed back by the end of the session. The last pattern could be a critical point where the pound might reverse to the upside once again.
The trading range for today might be between the key resistance levels at 1.9950 and the key support level at 1.9750.
The general trend is up as far as 1.9800 remains intact targets now at 2.0940 and 2.1050.

jpy

The dollar against the Japanese yen progressed to upside targets at 114.20s major resistance, where thin trading halted the pair to continue until the next resistance at 114.50s. The pair then turned back to the downside to the key support area at 113.80s, so we expect a key drop today.
The trading range for today will be between the key resistance at 115.00 and the key support at 113. 00.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Major Maeket Movers

Merry Christmas

It is the season to be holly and jolly dear reader; it is Christmas Eve and the time to gather with loved ones celebrating this cherished day to us all. This is the time we pay attention to nothing but friends and family; all participants are off to enjoy the holidays and today will be our silent night…

Crosses Technical Analysis

GBP/JPY

The Pound settled against the Yen, as low volume is dominating today's trading ahead of the holidays, the short term technical indicators are showing an upside potential for the pair to continue its upside general trend, yet it's very unlikely that we see any huge movements in the upcoming days, and the point at 225.81 seems to offer good demand for the pair.

EUR/JPY

The Euro inclined against the Yen last week to reach the 164 level, and settled today as low volume is dominating today's trading, the short term technical indicators are still showing an upside potential to continue the pair's upside general trend, and the point at 163.74 seems to offer good demand for the pair today.

EUR/GBP

The Euro gained heavily against the Pound last week, and the technical indicators are still showing an upside potential, as the next long term target is set to be at the 0.7310s, yet as low volume is expected to dominate today's trading we don't expect such a huge movement in the next couple of days, and the point at 0.7245 seems to offer good demand for the pair.

Major Technical Analysis

euro

Last Friday, the 13 nation currency drove through the upside direction, ending the day with significant signs for an upside wave after the long bearish wave; due to this move the technical oscillators got affected showing the reversal pattern for the week ahead till the key levels around 1.4520s.
The trading range for today might be between the key resistance level at 1.4470 and the key support level at 1.4270.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect buying Euro above 1.4360 with a target at 1.4420 stop loss below 1.4320.

gbp

Last Friday, the British pound rallied in an upside trend to hit the major resistance level at 1.9900, but it couldn't progress due to the uncertainties causing a currency sell, which in role put the pound down again around the opening area levels, this move could be a sign for a reversal pattern in the next step upon the technical directional studies indicates.
The trading range for today might be between the key resistance level at 2.0000 and the key support level at 1.9700.
The general trend is up as far as 1.9540 remains intact targets now at 2.0940 and 2.1050
We expect buying sterling above 1.9810 with a target at 1.9890 stop loss below 1.9770

jpy

Last week, the US dollar against the Japanese Yen rallied in the upside direction since it gathered enough momentum to break through the major resistance level at 113.50, reaching to the next key resistance around 114.20s; in the meantime the pair just touched the major descending line; hence, today the pair might drop down to the downside direction finishing the upside projection movements.
The trading range for today will be between the key resistance at 114.80 and the key support at 112.70.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 114.50 with a target at 113.50, stop loss above 114.80.

Crosses Technical Analysis

GBP/JPY

The Pound/Yen pair and just as expected continued its bearish movement yesterday, reaching to a very strong support and a trend line at 223.50, if this line is penetrated even the long term upside trend will be penetrated, so look today to buy dips around that level.

EUR/JPY

The Euro pair is still stuck in a very thin range, still marinating the upside trend over the medium to long term trends, yet over the short term it looks neutral with more of a bearish tendency, yet target are really tied. The level 163.09 looks like a good supply point, while 162.10 offer a good demand.

EUR/GBP

The Euro is still climbing against the pound as we expected, recording a new all time high at 0.7248 so far, and heading solidly towards the 0.7300 area, where demand today is seen around the 0.7225 levels.

Major Technical Analysis

euro

The European currency dropped to a two months low reaching 1.430s support, opening the path to the next support at 1.4270s; passing this key level may push the euro further to the significant support area 1.4180s, hence the Euro is expected to move in a bearish pattern as well.
The trading range for today might be between the key resistance level at 1.4440 and the key support level at 1.4200.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930.
We expect selling Euro below 1.4370 with a target at 1.4270 stop loss above 1.4420

gbp

The British pound yesterday moved down massively to hit the important support level at 1.980s to show a progressive pattern in the downside as long as it stays below the major level around 2.0000; today the pound is expected to move again toward the downside target at 1.9740s.

The trading range for today might be between the key resistance level at 2.0000 and the key support level at 1.9700.
The general trend is up as far as 1.9540 remains intact targets now at 2.0940 and 2.1050.
We expect selling sterling below 1.9865 with a target at 1.9770 stop loss above 1.9920.

jpy

The dollar against the Japanese yen yesterday dropped down showing the consolidation area at the peak of the upside short term wave to indicate some tendency in the downside direction today as long as the pair couldn't pass the major resistance level at 113.40s.
The trading range for today will be between the key resistance at 114.50 and the key support at 111 00.

The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 113.20 with a target at 112.20, stop loss above 113.65.

Major Market Movers

In...In...INFLATION!

The situation might get ugly now that inflation is getting to the economy and getting to it hard. After the release of the data, is the option of a rate cut back on the table? Well for starters it definitely will not be a smart one but if push comes to shove, then it could be the only way to go…

The GDP annualized final reading for the third quarter in the U.S. remained unchanged and unrevised from the preliminary reading at 4.9% marking the fastest growing pace since the 7.5% reading in the third quarter of 2003. But again the third quarter is of no concern to the Feds as they eye out now the last quarter of the year where expectations show that growth has slowed down to 1% or even lower as the housing market continues to collapse with higher prices and a weaker dollar.

The rapid growth last quarter was not balanced as it was more of a result to the increase in inventory building and a better trade balance which nearly accounted for half the growth.

In addition, the Personal consumption final reading for the third quarter showed a revision to the upside to 2.8% as expected but slightly higher than the preliminary reading of 2.7%. As for the core PCE final reading for the third quarter, it was also revised to the upside to 2.0% from both the expected and preliminary readings of 1.8%.

Now this is where the trouble comes. The Core personal consumption price index is the Fed's favorite meter! So when it comes in showing a high reading…then Houston we have a problem! Inflation is creeping up higher as core inflation now has increased to 1.9% in the past year rather than the previously reported increase of 1.8%. It is safe now to say that the Feds are caught between a rock and a hard place as they could be facing stagflation. If they do cut interest rates one more time making it an overall drag in interest rates by 1.25 percentage points, they could be in a real pickle and not be able to correctly monitor the situation.

Despite the fact that initial jobless claims is not that much of a major indicator to the labor market, but the increase in the amount of claims we witnessed in the U.S. the last week might trigger fear knowing that the strong labor market was what was somewhat providing background support to the economy. 346,000 people filed for claims inclining from the previous and expected readings of 333,000 and 335K respectively. This marked the highest level in more than a year.

In a different report the U.S. released the leading indicators for the month of November coming in at -0.4% worse than the expected reading of -0.3% but still better than October's reading of -0.5%.

This shows that economic growth is as a matter of fact weakening during this winter season especially that only three of the ten leading economic indicators inclined in November. The largest positive contribution came from vendor performance while stock prices were at the other end of the table being the largest negative contributor.

Hope is now hanging by the edge to see whether the term auction facility will ease the credit crisis in the markets. The Feds said that they might even continue after January. But if they fail and the only option is to cut rates, who knows what else could happen to the dollar. The deadline now is January 30 where the first fourth quarter reading will be uncovered…stay tuned!

Major Technical Analysis

euro

The European currency dropped yesterday massively as it passed the key support area at 1.4400s, which took the currency down to hit the major support level at 1.4320s. However the euro reversed back in the last session to the upside regaining some losses. The technical form has adjusted to show the downside target at 1.4260s.
The trading range for today might be between the key resistance level at 1.4440 and the key support level at 1.4200.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930
We expect selling Euro below 1.4400 with a target at 1.4270 stop loss above 1.4450.

gbp

The British pound yesterday was trading with tendency towards the downside after the pound breached the important support area at 2.0100. However it was able to reverse back in the last session but the pound is still drawing the bearish map in terms of a correction move.
The trading range for today might be between the key resistance level at 2.0200 and the key support level at 1.9800.
The general trend is up as far as 1.9800 remains intact targets now at 2.0940 and 2.1050
We expect selling sterling below 2.0010 with a target at 1.9900 stop loss above 2.0070.

jpy

The dollar against the Japanese yen yesterday moved to the upside target at the important resistance level at 113.50s. However it dropped in a strong move towards the key support area at 112.60s during the morning session. As a result, today the pair might move in the upside direction.
The trading range for today will be between the key resistance at 115.00 and the key support at 112. 50.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Majot Market Mover

BoJ, BoE, and ECB…

As the European central bank took the first step to heat the markets up yesterday, as they injected 500 billion euros into the financial system to provide more liquidity, the BoJ are starting their policy meeting to decide on interest rate, while the BoE are about to release the minutes of the last meeting.
As the bank of Japan are facing a lot of pressure to go for higher rates world wide, they are still having enough troubles in their homeland that prevents the world's second largest economy to go higher than 0.5% benchmark rate. The decision will be announced at the end of the Japanese session tomorrow.

While the bank of England decided lately to cut their rate a 25 basis points reaching to 5.50%, still the highest amongst major world economies, yet investors are analysts are waiting to understand what was really behind that decision??! What are the main reasons behind it??! Does the MPC see that high interest rate might lead the UK housing market to its lowest as it did in the United States??!!

Expectations that the MPC voted to cut rates as in 6 to 3, the three were actually voting to keep rates steady supposedly, seeing the need to lower rates in the United Kingdom, yet sees no need to rush into anything that might stimulate inflation all over again.

Its not easy for central banks nowadays to make decisions about the cost of borrowing, with the recent credit crunch, no one see himself beyond the strike, they all feel the heat coming from the outside, and they are trying to keep it steady from the inside, and investors have no mercy when it comes to their return on investment and the risks threatening their possessions.

Those are the main highlights for today dear reader, those will be the major market movers, till the U.S. GDP growth report hits market with its glory.

Crosses Technical Analysis

GBP/JPY

The Pound settled against the Yen that was due to low volume and was seen clearly yesterday and since today morning, though the general trend remains to the upside, the short term indicators are yet to show us the correction is fully over, and the point at 227.35 seems to offer good demand for the pair.

EUR/JPY

The Euro also settled against the Yen as low volume was the obvious seen thing since early this morning, the general trend for the pair remains to the upside, but the short term indicators are showing a downside potential, and the point at 162.34 seems to offer good demand for the pair.

EUR/GBP

The Euro gained against the Pound yesterday and continued its upside wave today morning to progress its upside general trend, yet the short term indicators are yet to show the full reversal to the upside, and the point at 0.7123 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency fell last week in a very strong pattern as it couldn't brake out the key resistance level at the miner descending trend line at the levels of 1.4440s, falling from there to the low of the key support level at 1.4360s by which passing all the key downside levels, at the end of the day the Euro reversed back to the upside again to close in a neutral pattern, all of this indicate an upside potential for today.
The trading range for today might be between the key resistance level at 1.4550 and the key support level at 1.4300.
The general trend is up as far as 1. 4060 remains intact targets now at 1.4780 and 1.4960
We expect buying Euro above 1.4387 with a target at 1.4470, stop loss below 1.4340.

gbp

The British pound yesterday started in a weak pattern by which it couldn't breach the main resistance level at 2.0220s to get down again all the way towards the major support at 2.0110, nevertheless; the technical oscillators still show the downside way with some slowing upside movements.
The trading range for today might be between the key resistance level at 2.0320 and the key support level at 2.0050.
The general trend is up as far as 1.9800 remains intact targets now at 2.1170 and 2.1420
We expect selling sterling below 2.0160 with a target at 2.0080 stop loss above 2.0200.

jpy

The dollar against the Japanese yen rallied to the upside direction yesterday as it couldn't get below the major support level at 112.80s by which it started an upside move rapidly. Yet the pair extended the upside trend after it confirmed some bullish signals.
The trading range for today will be between the key resistance at 114.50 and the key support at 111.50.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.

Holidays

happy holidays , sorry for being busy the last two days , i was busy in work cause of holidays , and i couldnt update the blog content , anyhow happy holiday again and i will update the content from today , thanks
Admin

Crosses Technical Analysis

GBP/JPY

The Pound gained against the Yen, as carry traders gave the pair some momentum to incline back to reach near the first target above the 230.00s, and now the next target is set to be at the 230.60s level, the general trend is up and the point at 227.91 seems to offer good demand for the pair.

EUR/JPY

The Euro is still consolidating against the Yen, as the pair is yet to gather some momentum to reach the upside targets at 165.00s to continue the pair's upside general trend, and the point at 163.44 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound, as it seems the pair is extending its downside correction, yet the general trend remains well to the upside, and the target remains intact at 0.7200s, and the point at 0.7144 seems to offer good demand for the pair.

Majot Technical Analysis

euro

The European currency depreciated yesterday in a major move with high levels of volume to reflect the strength of the movement but remained within the same consolidation area that the Euro has formed a couple of days ago. Nevertheless, the Euro is expected to reverse back to the upside as the technical indicators showed some upside potential.
The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4550.
The general trend is up as far as 1. 4060 remains intact targets now at 1.4780 and 1.4960
We expect buying Euro above 1.4620 with a target at 1.4720 stop loss below 1.4570.

gbp

The British pound yesterday fluctuated within the consolidation area due to some restrictions ending the day in a bearish form. On the other hand, the pound has formed some bullish signals to clarify the upside direction for today.
The trading range for today might be between the key resistance level at 2.0600 and the key support level at 2.0300.
The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect buying sterling above 2.0380 with a target at 2.0520 stop loss below 2.0320

jpy

The dollar against the Japanese yen rallied to the downside direction yesterday in the morning sessions as it couldn't breach the major resistance level at 112.40s. Yet the pair extended the downside wave after it confirmed some bearish signals.
The trading range for today will be between the key resistance at 112.70 and the key support at 108.00.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.
We expect selling USD/JPY below 112.60 with a target at 111.00, stop loss above 113.35.

Crosses Technical Analysis

GBP/JPY

The Pound inclined against the Yen yesterday to reach the target at 230.30s that we talked about earlier yet could not hold above it as the pair dropped back today, yet the general trend is to the upside, and the pair is expected to continue inclining once again, the point at 227.35 seems to offer good demand for the pair.

EUR/JPY

The Euro climbed yesterday against the Yen to breach the 164.10s target, and now the next target is set to be at the 165.00s level, the general trend remains well to the upside, and the technical indicators are still showing an upside potential, and the point at 163.64 seems to offer good demand for the pair.

EUR/GBP

The Euro gained against the Pound as the pair climbed above the 0.7200s level and now the target is set to be at the 0.7240s level, the general trend is to the upside, as the technical indicators reversed and showing an upside potential now, and the point at 0.7195 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday rallied to the upside direction after it reversed back from the significant support level as low as 1.4650s to the major upside trend line to hold the Euro up until the major resistance level at 1.4740s with high volume. This indicates the upside potential for today to set the target at 1.4830s resistance level if the currency succeeds passing the important resistance level at 1.4770s.
The trading range for today might be between the key resistance level at 1.4858 and the key support level at 1.4600.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.
We expect buying Euro above 1.4680 with a target at 1.4780, stop loss below 1.4630.

gbp

The British pound yesterday moved in the upside channel in a strong bullish movement since it failed to breach the key support level at 2.0340s to drive through the upside wave hitting the levels of 2.570s; opening a new chance for the pound to retest the major upside resistance at the point of 2.650s. The pound today might progress towards the upside as well.
The trading range for today might be between the key resistance level at 2.0650 and the key support level at 2.0360.
The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect buying sterling above 2.0440 with a target at 2.0550 stop loss below 2.0380

jpy

The dollar against the Japanese yen rallied towards the upside since it faced a solid support level yesterday at 110.70s causing it to reverse its direction rapidly to the upside. Therefore the pair opened the chance to move towards the 112.80s level to extend the wave after that until the levels of 113.40.
The trading range for today will be between the key resistance at 113.40 and the key support at 110.50
The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.70.

Crosses Technical Analysis

GBP/JPY

The Pound declined yesterday against the Yen as investors reduced their Carry Trades, yet it started to incline back since early this morning, the general trend remains well to the upside, and the technical indicators are still showing an upside potential for the pair to reach the next target at 230.30s, and the point at 226.08 seems to offer good demand for the pair.

EUR/JPY

The Euro also declined against the Yen yesterday due to a huge selling wave, yet the pair inclined back today, to continue with it upside general trend, the technical indicators are showing an upside potential, as the first target is the 164.10s level, and the point at 162.80 seems to offer good demand for the pair.

EUR/GBP

The Euro gained against the Pound yesterday but dropped slightly today, the technical indicators are showing a downside potential for the pair to continue its correction, the general trend remains in favor of the Euro, and the point at 0.7159 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday started in a bullish movement to reach the key area at 1.4750s; however, the low volume lead the currency back to the downside in a strong bearish patter to the ht the low at 1.4630s. This move is considered as a step ahead of the downside direction today until the levels of 1.4550s.
The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4450.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect selling Euro below 1.4680 with a target at 1.4570, stop loss above 1.4730.

gbp

The British pound yesterday moved through the upside channel to hit the downside resistance line as high as 2.0520, before declining heavily to pass the key support level at 2.0400 to reach the 2.0320s. Therefore, we expect the pound today to drive through the downside channel until the key support area around 2.0250s.
The trading range for today might be between the key resistance level at 2.0440 and the key support level at 2.0200.
The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect selling sterling below 2.0380 with a target at 2.0270 stop loss above 2.0450.

jpy

The dollar against the Japanese yen rallied in the downside direction with high levels of volume to indicate the strength of the bearish move. The pair yesterday managed to hit the key support area around 110.50 showing the tendency to progress today in the same direction until the key level at 109.50s.
The trading range for today will be between the key resistance at 112.00 and the key support at 109.20.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.
We expect selling USD/JPY below 110.75 with a target at 109.80, stop loss above 111.30.

Profit/Loss Calculations ( Education )

Profit/loss calculations for spot direct currencies

The equation:
Profit/loss = (sell price – buy price) x traded amount

Profit/loss calculations for spot indirect currencies

The equation:
Profit/loss = (sell price – buy price) / closing price x traded amount

Profit/loss calculations for spot cross currencies

The equation:
Profit/loss = (sell price – buy price) x traded amount

NOTE:
in the case of cross currencies if the result of the profit/loss calculation was denominated in a direct currency we will multiply it by the exchange rate for that currencies with US dollar at the moment when the rade was closed to get the final result in US dollars. And if the result of the profit/loss calculation was denominated in an indirect currency we divide it by the exchange rate of the currency with the US dollar at the moment the trade was closed to get the final result in US dollars.

Profit/loss calculations for precious metals

The equation:
Profit/loss = (sell price – buy price) x traded amount

Crosses Technical Analysis

GBP/JPY

The Pound inclined against the Yen to reach the first target we talked about and now the next target is set to be at the 230.30s, the technical parameters are still showing an upside potential for the pair to continue its general trend, and the point at 228.24 seems to offer good demand for the pair.

EUR/JPY

The Euro also inclined against the Yen to reach the 164.10 target and now the next target is set to be at the 168.40s which is the long term target, the general trend remains well to the upside, while the technical parameters are still showing an upside potential, and the point at 163.57 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound in a correctional move, as the pair inclined above the 0.7200s level yet retraced back below it, the general trend remains to the upside but the short term parameters are still showing a downside potential, and the point at 0.7144 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday rallied in the upside direction as the currency built a strong base at the major trend line at 1.4600 to launch the bullish move. The euro tried to hit the major resistance level at 1.4730s; in the meantime, the technical parameters indicated that the euro still has the chance to keep moving to the upside today.
The trading range for today might be between the key resistance level at 1.4840 and the key support level at 1.4630.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect buying euro above 1.4680 with a target at 1.4780, stop loss below 1.4635.

gbp

The British pound yesterday rallied to the upside direction in a progressive pattern with high levels of volume to take the pound up until the major resistance level at 2.0480s. After yesterday's close, the technical studies indicate that the pound still has the upside potential for today.
The trading range for today might be between the key resistance level at 2.0570 and the key support level at 2.0240.
The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect buying sterling above 2.0440 with a target at 2.0560 stop loss below 2.0380

jpy

The dollar against the Japanese yen slightly moved to the upside yesterday to hit the major resistance level at 112.00 to before declining to consolidate around the 111.60s. However, the pair is expected to drop today as it closed below the major downside trend line until the levels of 110.
The trading range for today will be between the key resistance at 112.50 and the key support at 110.40.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.

Basic Trading Concepts ( Education )

Basic Trading Concepts
Tutorial

If you decide to become a trader,
it's difficult to just jump into a market and be one. Before you can
even move into the nuts and bolts of trading, there are some basic
concepts you need to understand – the idea of trading itself, your
perception of trading, your resources, the use of money, the role
you play in the trading process and a number of other items that
deal mainly with the trader and not the trading.

The trading issues – trading
instruments available, how markets work and other trading basics –
are covered in the next tutorial. You may think you can just breeze
through these first two tutorials, but they are the foundation of
your trading education.

Knowing What You Don't Know That
headline may sound like a strange way to start a tutorial, but when
it comes to something as complex as trading, it is important to
acknowledge the preconceived notions you may have about trading and
to understand that you probably have much to learn about this
complex subject, especially if you intend to master what could be
the most difficult undertaking you will ever attempt.

First
and foremost, despite what you may have heard or read about trading
being an easy, get-rich-quick scheme, the truth is that there are no
trading secrets and no easy paths to quick success in trading
markets. Beware of anyone who tries to tell (or sell) you such. It's
no coincidence that trading markets is similar to most other human
endeavors: Hard work and experience are required to achieve notable
success. By the same token, understanding the process of trading can
be achieved with perseverance and a willingness to continue to
learn.

Ironically, a major advantage of being an experienced trader is
knowing what you don't know about markets and trading. There are
certain elements of trading that you may never know nor understand,
like knowing for sure what a market is going to do in the future.
Market analysis and trading is not a business of bold predictions
but one of exploring market probabilities based upon market
knowledge, price history, human behavior and trading experience.

Knowing that you don't know exactly what a market will do actually
gives you a trading edge because it means you probably will exercise
more caution and think about and plan for what could happen if a
trade turns against you. Successful traders know that some trades
will turn against them and that they need to take steps to preserve
capital to trade another day.

Anyone who plans to trade for a while absolutely must respect the
markets. Most people do not like to be "wrong," but only the market
is 100 percent right. Traders who think they "know" exactly what a
market will do are not showing the markets respect.

Why do you want to trade?

You may be comfortable accepting the fact that
you don't know everything there is to know about trading yet, but
you definitely should have a good idea about several things when you
get into trading. The first is why you want to trade in the first
place. People have a number of motives for trading, all of which
have merit, but you should be clear what it is that is driving you
into trading. Your reasons for trading may go a long way in
determining your trading style.

Profits

Probably every trader's goal is to make money.
But if that is your main reason for trading, are you willing to do
what it takes to achieve this goal? It will mean you have to provide
the seed money and other resources you need to be successful, and it
will involve a commitment to learning to gain trading experience.

If trading is going to be your business, you
obviously have to put making money high on your list of goals. That
requires consistent, strong discipline and the ability to control
your emotions as none of the experience or success you have gained
in other areas will guarantee that you will be a success in trading.
Your trading approach may even be boring, but if your real goal is
making money, you will have to have the discipline to stick with a
trading plan.

Being 'right'

Are you a person whose greatest satisfaction
comes from being right about things? Traders generally love to
compete and be better than everyone else in whatever they do. Just
having the opportunity to crow a little about their prowess is their
biggest reward.

However, trading may be one of the worst places
to look to feed an ego. Whatever success you have had in other
aspects of your life may not transfer very well to the trading
arena, which has been known to humble even the strongest ego. Of
course, traders have to have a strong sense of ego to have enough
confidence to trade, but you'll have to keep that ego in check
whenever you enter a market position if you want to survive as a
trader.

Excitement

Trading certainly can provide plenty of
excitement, both highs and lows, and that may be reason enough for
trading. But expect to pay an entertainment tax. Just being in a
market position can be exhilarating and can inspire you to keep up
with what's happening in the market and in the world's news events.

However, to be successful over a longer term – unless you have deep
pockets – you usually will have to forego the excitement and emotion
generated by trading, just as you have to keep a lid on your ego
trip. You naturally will experience some excitement whenever you are
trading, but it is a factor you must control. If excitement is an
objective of trading for you, perhaps the solution is to have one
account you trade conservatively and another account where you get a
little wilder.

What Are Your Resources?

In addition to your goals for trading, you also
should be well aware of the resources you bring to the trading
table. They will play a big part in the markets you can trade and in
the way you trade them. If you think you can be a big-time bond
trader with a $5,000 account or a day-trader while working a
full-time job, you'll soon get a dose of reality when it comes to
trading.

Major Market Movers

A Calm Start…
Another week starts in our journey, new hopes and dreams were created on the weekend, new spirits and determinations got unleashed, and here we are, with the first day, a calm start for a really hectic and busy week for the world's largest economy, so let's ease you in dear reader.

The U.S. economy will start this week pumping some class A fundamentals into the markets, where the start is going to be the FOMC decision, where a 25bp cut is expected in the markets, and another 25 point on the discount rate in ongoing attempts to handle and contain the credit crisis.

Later this week, inflation data will start to flow, starting form the producer price index and then the consumers price index, two important indicators that might confirm if it was a good decision that the FOMC made or not.

Retail sales and trade balance numbers are also on the queue this week, the numbers are really important as well, but with all the traffic we have they might be the less important ones, and all eyes will be mainly on the rate decision and the accompanying statement.

Dear reader, dollar weakness is still the top story as the year is near the end, policy makers are trying to at least catch up in 2008 and make it a better time for the U.S. economy and the drawing U.S. dollar, but up till now, look out for more weaknesses, as it is still the highest probability...

Crosses Technical Analysis

GBP/JPY

The Pound inclined against the Yen as investors returned to Carry Trades, the technical parameters adjusted to show an upside potential to progress the pair's upside general trend, the targets are set to be at the 229.10s then 230.30s, and the point at 226.08 seems to offer good demand for the pair.

EUR/JPY

The Euro settled against the Yen but its inclining gradually as investors are back on holding Carry Trades, the General trend for the pair remains well to the upside, and targets are set at 164.10s on the short term and the 168..40s on the long term, and the point at 162.97 seems to offer good demand for the pair.

EUR/GBP

The Euro declined slightly against the Pound in a correctional move as the pair inclined heavily last week, yet the general trend remains well to the upside, and targets are set at the 0.7227s then 0.7250s, while the point at 0.7195 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency last Friday closed in a balanced pattern; that's since the key support level at 1.4590s hindered the Euro's drop, after plunging from the day's high at 1.4680s. Therefore the Euro now is about to form wave B in the upside direction within the extended correction wave; the Euro is expected to move then further higher today.
The trading range for today might be between the key resistance level at 1.4770 and the key support level at 1.4530.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.
We expect buying euro above 1.4645 with a target at 1.4710, stop loss below 1.4600.

gbp

The British pound last week dropped massively reaching 2.0180s support levels; that in role led the pound to an over-sold area. That move provides a great chance for the pound to rebound. Last Friday the pound fluctuated to closed in a bullish pattern causing key adjustments to the technical oscillators reflecting the upside tendency for today.
The trading range for today might be between the key resistance level at 2.0440 and the key support level at 2.0200.
The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect buying sterling below 2.0285 with a target at 2.0380 stop loss below 2.0235

jpy

The dollar against the Japanese yen remained subdued last Friday since it lacked momentum closing with tendency towards the upside. The pair still has a chance to hit the main resistance level at the major downside tend line at 112.20s to reverse back to the downside after reaching an over bought-area.
The trading range for today will be between the key resistance at 112.50 and the key support at 110.20.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.
We expect selling USD/JPY below 112.15 with a target at 110.700, stop loss above 112.80.

Crosses Technical Analysis

GBP/JPY

The Pound dropped further yesterday against the Yen, as the pair is still showing a downside potential on the short term, though the medium to long term trends remain well to the upside, and the long term target is set to be at the 230.20s level, while the point at 223.90 seems to offer good demand for the pair.

EUR/JPY

The Euro settled against the Yen yesterday, as the pair is yet to gather some momentum that will take it to he upside to progress its upside general trend, targets now are set to be at the 164 level, while the point at 161.89 seems to offer good demand for the pair.

EUR/GBP

The Euro continued to incline against the Pound yesterday, as the pair breached the 0.7200 level again and the short term indicators are still showing more room for an upside wave, the general trend remains well to the upside, and the first target is set to be at the 0.7250s level, while the point at 0.7195 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday declined in the first trading session to stay below the major support level at the major upside trend line to reach the levels of 1.4520s. However, the currency managed to reverse back to the upside replacing the bearish pattern with a bullish one to close in a positive form to indicate to the upside potential.
The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4450.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect buying euro above 1.4600 with a target at 1.4690, stop loss below 1.4545.

gbp

The British pound yesterday rallied to the upside direction after it hit the deep support at 2.0180s; but since the pound touched the major trend line it rapidly reversed back to the upside with heavy bullish orders to put the pound up at the opening level forming a major reversal pattern setting the upside target at 2.0470s in the short term period.
The trading range for today might be between the key resistance level at 2.0400 and the key support level at 2.0100.
The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect buying sterling above 2.0260 with a target at 2.0370 stop loss below 2.0180.

jpy

The dollar against the Japanese yen jumped in the upside trend yesterday since it failed to breach the key support level at 110.50. This move resulted in a key adjustment in the technical patterns to show the potential for the pair to hit the major resistance level at 112.00.
The trading range for today will be between the key resistance at 112.50 and the key support at 109.80.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.
We expect buying USD/JPY above 111.20 with a target at 112.00, stop loss below 110.70.

What Are Charts? ( education )

A price chart is a sequence of prices plotted over a specific time frame. In statistical terms, charts are referred to as time series plots.



On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale. Prices are plotted from left to right across the x-axis with the most recent plot being the furthest right. The price plot for IBM extends from January 1, 1999 to March 13, 2000.
Technicians, technical analysts and chartists use charts to analyze a wide array of securities and forecast future price movements. The word "securities" refers to any tradable financial instrument or quantifiable index such as stocks, bonds, commodities, futures or market indices. Any security with price data over a period of time can be used to form a chart for analysis.
While technical analysts use charts almost exclusively, the use of charts is not limited to just technical analysis. Because charts provide an easy-to-read graphical representation of a security's price movement over a specific period of time, they can also be of great benefit to fundamental analysis. A graphical historical record makes it easy to spot the effect of key events on a security's price, its performance over a period of time and whether it's trading near its highs, near its lows, or in between.

London Bullion Report

Gold steady around $800 as traders await Payrolls

Thursday proved quite a volatile day for the precious metal as the dollar strengthened initially before reversing course as the ECB kept it lending rates unchanged following calls from some member to raise rates. EUR/USD closed at 1.4632 having dipped to 1.4626, while traders today will be focusing on the US jobs market with the release of November’s Non-Farm Payrolls, which is expected to show the addition of 85,000-jobs. Other data will show October Consumer Credit and December Consumer Sentiment, forecast at 75.0 from 76.1 in November. Oil prices bounced back above $90/barrel yesterday following positive economic forecasts from OECD. NYMEX crude settled at $90.23 and is little changed this morning.
Gold posted a low of $785 before recovering back to $801.80 by the close as the dollar turned negative. The yellow metal has been straddling the $800 level so far this morning and is likely to spend more time trading between chart support at $785/780/776 and further scaled up long selling above $805. Focus today is centred on US payrolls with a strong reading potentially pressuring the metal lower, however a disappointing reading will again raise concerns about the health of the US economy, increasing the likelihood of a rate cut by the Fed next week, as well as reinforcing gold’s importance as a safe-haven asset.
Silver again found good support around $14 Thursday, recovering from a low of $13.95 to close at $14.49. The return of some investment demand has led to an improvement in sentiment in recent days and could enable a challenge of chart resistance at $14.74 and $15.05.
Renewed investment demand has lifted platinum to $1470 this morning and the metal will continue to remain underpinned by tight market fundamentals in the coming sessions following this years missed production targets. Chart support should continue to be found at $1450/1440 and more substantially around $1435 with resistance expected at $1482 and all-time high of $1490.
Palladium dipped to $340 yesterday before trading back to close unchanged. Again the metals negative fundamentals are capping its upside potential and a test back to $330 could be triggered should fund players unwind their long exposure.

Major Market Movers

Good Report?!!

Don't you just hate it when you place bets knowing that there are only two ways to go and you later find out that there is secret option number 3? Job's report was a complete disappointment for both the bears and bulls as the reading was straight in the center.
The US released the Non-Farm Payrolls for the month of November showing the economy added 94K jobs higher than the expected expansion of 80K however it is still lower than the previous job report of 166K in which it was revised to 170K. Also released was the Unemployment Rate for the month of November unchanged at 4.7% inline with the previous yet slightly lower than the forecasts of 4.8%. Finally, the Average Hourly Earnings for the month of November show an 0.5% rise higher than the forecasted and the previous figures of 0.3% and 0.2% respectively.The labor report showed that additions in the labor market was led by the services sector, which added 127,000 jobs, somewhat limited the risk of a severe economic slowdown which could've resulted into a recession. Strength was also seen in the government sector as it increased by 30,000 and the retail sector which added 24,000. Those sectors were able to offset the ongoing pattern in construction and manufacturing job losses and also the financial services sector. Goods-producing industries cut 33,000 jobs in November; 24,000 in construction and 11,000 in manufacturing.Surprisingly, a separate survey concerning the household sector showed the strongest job growth in six years as 696,000 people said they had jobs in November which resulted for the unchanged employment rates at 4.7%. This was shocking since employment had fallen by a total of 250,000 since March.The White house was the first to comment on the job's report as White House spokesman Tony Frato said that it was "certainly good news" and the fact that unemployment was unchanged at 4.7% "bodes well for the economy."Markets reacted instantly as the news was released showing that the dollar gained against majors but it was just a matter of minutes before markets rebounded and reversed to return to normal levels.In another report, the U.S. released University of Michigan Confidence preliminary reading for the month of December coming in at 74.5 lower than the forecasted reading of 75.0 and previous reading of 76.1 making it hit its lowest levels since fall of 2005. Confidence seems to have slipped in the economy and its affect might soon emerge.It's already expected that the Feds will cut rates but the question was whether it will b by 25 bp or 50 bp? However, now after the jobs report came in better than expected, markets might now lock a 25 basis point cut taking their benchmark interest rate to an overall to 4.25%. Arguments now are taken to a new level as they debate the fact on how many rate cuts are still to come. One of the Feds main concern is the fact that they are worried that banks don't want to borrow from them because they are worried and that it would recognized as a failing bank.Dear reader, relax during the weekend and don't stress yourself as four days remain before the Fed's decision. Enjoy your time and challenge yourself with a little game, place a bet on the rate decision and who knows? Maybe you're a good analyst yourself…

Crosses Technical Analysis

GBP/JPY

The Pound dropped further yesterday against the Yen, as the pair is still showing a downside potential on the short term, though the medium to long term trends remain well to the upside, and the long term target is set to be at the 230.20s level, while the point at 223.90 seems to offer good demand for the pair

EUR/JPY

The Euro settled against the Yen yesterday, as the pair is yet to gather some momentum that will take it to he upside to progress its upside general trend, targets now are set to be at the 164 level, while the point at 161.89 seems to offer good demand for the pair.

EUR/GBP

The Euro continued to incline against the Pound yesterday, as the pair breached the 0.7200 level again and the short term indicators are still showing more room for an upside wave, the general trend remains well to the upside, and the first target is set to be at the 0.7250s level, while the point at 0.7195 seems to offer good demand for the pair.

Major Technical Analysis

euro


euro
The European currency yesterday declined in the first trading session to stay below the major support level at the major upside trend line to reach the levels of 1.4520s. However, the currency managed to reverse back to the upside replacing the bearish pattern with a bullish one to close in a positive form to indicate to the upside potential. The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4450. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect buying euro above 1.4600 with a target at 1.4690, stop loss below 1.4545.

gbp

The British pound yesterday rallied to the upside direction after it hit the deep support at 2.0180s; but since the pound touched the major trend line it rapidly reversed back to the upside with heavy bullish orders to put the pound up at the opening level forming a major reversal pattern setting the upside target at 2.0470s in the short term period. The trading range for today might be between the key resistance level at 2.0400 and the key support level at 2.0100.The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect buying sterling above 2.0260 with a target at 2.0370 stop loss below 2.0180.

jpy

The dollar against the Japanese yen jumped in the upside trend yesterday since it failed to breach the key support level at 110.50. This move resulted in a key adjustment in the technical patterns to show the potential for the pair to hit the major resistance level at 112.00. The trading range for today will be between the key resistance at 112.50 and the key support at 109.80.The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.80.
We expect buying USD/JPY above 111.20 with a target at 112.00, stop loss below 110.70.

Major Market Movers

Spare the AGONY!

Enough is ENOUGH! The race is almost over as two of the three contestants passed the finish line and what a dreadful moment it was! The data revealed today again showed uncertainty in the markets making us think once more on the validity of the information we are given. Are the resources trustworthy enough?
Opposing all expectations, the ADP figures surprisingly showed an incline of 189,000 jobs in the market compared to last month's revised reading of 119,000 from 106,000. Projections were only for a growth of 53,000 but as we see, the actual number is more than 3 times as much. The biggest contributor to this figure was topped by the service sector, and since it accounts for nearly 80% of the U.S. economy, it weighs a whole lot. Although the goods-producing sector declined 8,000; it was offset by the massive gain of 197,000 in service-providing jobs. Most of losses were in the manufacturing sector which dropped by 5,000. This marks the 12th monthly decline in a row in the goods producing sector.But still, the ADP is a fairly good indicator for the jobs report due this Friday so does this mean we will see a positive reading in the Non-farm payrolls? Well first thing's first, concerning the labor market; data released was quite contradictory since the employment sub-index coming from the ISM-manufacturing showed a decline. We now have one determinant which weighs the most in the market…Friday's Jobs report! Great revisions have been witnessed over the past couple of months in that report which only leads to one question; can we actually trust the Job's report as an indicator to the economy? Especially with it being the number one indicator for the performance of the labor market?Non-farm productivity in the third quarter soared to 6.3% but this makes sense since the GDP for the third quarter climbed to 4.9%. The productivity reading marked its best reading in four years also showing that inflationary pressures from the labor market is not as bad as once seen. This gives an edge to the Feds that if they do decide to cut interest rates, they can do so without baring the burden that inflation could spike higher despite the fact that the CPI had slightly increased but remains within containment. High productivity growth means an economy can grow quickly without inflation which will most likely raise living standards. However, what was witnessed today proved the contrary since unit labor costs fell 2% indicating lower wages reflecting the slip in spending and incomes.Factory orders also shot up to 0.5% in October from the expected flat reading of 0.0% as it was supported by defense goods and orders for primary metals and electrical equipment. Defense goods soared 16% recording a three month high as primary metals and electrical equipment rose 3.2% and 2.9% respectively.The ISM non-manufacturing index declined to 54.1 from 55.8 in October however still signaling expansion in the non manufacturing sector. Adding to the misery and confusion of the labor market and inflationary pressures, both employment sub-index and prices index showed horrible figures. The employment component decline to 50.8 in November from 51.8 in October as inflationary pressures supported the rise in prices to 76.5 this month from the previous reading of 63.5. Also new orders fell to 51.1 from 55.7 which might show slowing demand as the U.S. economy poorly performs.It is safe to say that all the readings for the third quarter indicated strong performance for the economy during that time and faded away fears of entering a recession. However, the start of the fourth quarter and what is expected still to come might take all this happiness and upbeat away and revive the fears. As mentioned before, Friday's report might lead to the Feds to actually reconsider cutting interest rates only if the labor market shows a strong reading. But again is it trustworthy? Or will there be another revision? The ship is sinking with no time left! The clock is ticking now waiting for the final contestant to cross the finish line and save the day; hopefully not making Friday another BLACK one!

Crosses Technical Analysis

GBP/JPY

The Pound is still not able to gain against the Yen, as the pair lacks momentum, the general trend for the pair remains well to the upside, and the first target is still the 227.90s, but the pair is yet to show solid upside movement, the point at 225.42 seems to offer good demand for the pair.

EUR/JPY

The Euro inclined against the Yen after gathering some momentum that took it to the upside in order to continue the pair's upside general trend, the targets remains intact at 163.70s then 164.65s, and the point at 162.11 seems to offer good demand for the pair.

EUR/GBP

Just like we expected the Euro inclined against the Pound, though a huge momentum supported the pair to breach the resistance levels up to the 0.7180s level, now the pair needs to consolidate in order to continue its upside general wave, and the point at 0.7144 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency rallied to the upside direction yesterday after it reversed back from the significant support level as low as 1.4630s to the upside trend line to hold the euro up until the major resistance level at 1.4760s in high volume to indicate the upside potential for today setting the target at the 1.4830s resistance level. The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4640. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect buying Euro above 1.4735 with a target at 1.4830, stop loss below 1.4690.

gbp

The British pound yesterday declined in a strong bearish movement since it failed to pass the key resistance level at 2.0670s to drop down hitting the levels of 2.0560s opening a new chance for the pound to retest the major upside trend line at the point of 2.0460s support. Today, the pound might progress towards the downside as well. The trading range for today might be between the key resistance level at 2.0680 and the key support level at 2.0400.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect selling sterling below 2.0585 with a target at 2.0480 stop loss above 2.0640.

jpy

The dollar against the Japanese yen depreciated to the downside direction yesterday with high levels of volume in a very strong bearish pattern since it couldn't breach the main resistance level two days ago at the minor downside trend line at 111.00 to arrange a downside trend. Today we expect the pair to progress towards the downside as well. The trading range for today will be between the key resistance at 110.50 and the key support at 108.50The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.70.
We expect selling USD/JPY below 109.90 with a target at 108.80, stop loss above 110.50

Currency Updates

Aversion Assured...

(11:30 GMT - 4/12/2007)After majors declining against the disguised strength of the dollar, it is assured the investors now are running away from riskier assets and heading more towards safer assets. Risk aversion seems to be dominating the markets as the unwinding of carry trades is back in action. Markets have locked the fact that a rate cut will be definite in both the EU and the UK and the affect has surfaced.The Japanese Yen captured the spotlight today as it dragged the USD/JPY pair back to the 109.00 levels. Although the dollar seemed to be performing well in the early transactions it didn't have enough momentum to affect the pair. The pair recorded a high of 110.53 before recording a low of 109.70.The 13 nation currency was able to rebound against the dollar to record a new high for the day at 1.4724 after it reached a low of 1.4634. The Euro Zone released its PPI reading for the month of October coming in at 0.6% higher than both the expected and previous readings of 0.4%. As for the annual reading, it was released at 3.3% inclining from the forecasted reading of 3.0% and the prior reading of 2.7%. Still to come later this week is rate decision by the ECB where it is widely expected that the rates will be held steady at 4.00%.The dollar is losing it against the most active currencies traded as the Royal currency, similar to the Euro, was able to reverse the morning correction. With a fundamental free calendar for today, the sterling recorded a high of 2.0672 before hitting a low of 2.0586. The highlight remains the decision by the MPC where rates will remain unchanged at 5.75%.Unwinding of carry trades was also evident on the Canadian Dollar and the Australian dollar in the morning ahead of both central banks' rate decisions, but due to further weakening of the dollar, they gained slight momentum. The BoC and RBA rate decision are due later today where they both are expected to remain unchanged at 4.50% and 6.75% respectively.

Market News

BoC Rate Decision
The Bank of Canada's rate decision was released showing a surprise cut in rates by 25 basis points to take there benchmark rates to 4.25% against the widely expected unchanged rates of 4.50%.
Losses from the U.S. sub-prime mortgages increased as the housing market slump continues to worsen causing bank funding costs to increase worldwide including Canada. With a damaged U.S. economy, Canadian exports are facing increased risks to the downside but after the collapse of the Canadian dollar to reach 1.0152 against the US dollar, marking the highest since September 20; it might not be that bad. Inflationary pressures changed the bank's outlook for 2009 concerning inflationary risks causing them to go to the downside.

Crosses Technical Analysis

GBP/JPY

The Pound inclined yesterday against the Yen to reach the first target at 227.90, yet could not hold above it and declined back, now the first target is still the same then the 229.20s level, as the pair's general trend remains well to the upside but it needs some momentum, the point at 226.96 seems to offer good demand for the pair.

EUR/JPY

The Euro declined against the Yen, as the pair still needs to gather some momentum in order to reach the next target at the 163.70s, the technical indicators show an upside potential for the pair to continue its upside general trend, and the point at 161.25 seems to offer good demand for the pair.

EUR/GBP

The Euro declined further against the Pound yesterday to continue the correctional move it started, but the general trend for the pair remains well to the upside, the technical indicators are showing an upside potential now as the next target is the 0.7130s level, and the point at 0.7090 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency fluctuated in a balanced move yesterday below the key upside trend line; however, the technical oscillators studies pointed some reversal signals to take the Euro to the upside today depending on the high level of volume to cause a major breakthrough to the levels of 1.4710 resistance. The trading range for today might be between the key resistance level at 1.4780 and the key support level at 1.4870. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.
We expect buying Euro above 1.4650 with a target at 1.4735, stop loss below 1.4610.

gbp

The British pound yesterday arranged a bullish move despite the downside tendency that appeared in the first trading session as the pound couldn’t breach the key support level at 2.0520s to set the upside target as the high as 2.0680s levels. Today we expect the pound to continue towards the upside direction. The trading range for today might be between the key resistance level at 2.0800 and the key support level at 2.0500.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400.
We expect buying sterling above 2.0640 with a target at 2.0720 stop loss below 2.0585.

jpy

The dollar against the Japanese yen showed a quiet movement last time due to the low volume however it managed a key drop to hit the important support at 110.05. On the other hand, the technical oscillator parameters placed some bearish signals yesterday to lead the pair to the downside. The trading range for today will be between the key resistance at 111.50 and the key support at 109.00The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.
We expect selling USD/JPY below 110.65 with a target at 109.50, stop loss above 111.10.

Crosses Technical Analysis

GBP/JPY

The Pound declined slightly against the Yen, yet the pair is most likely to be heading towards the upside and it needs some momentum to progress its upside general trend, and breach the target around the 227.90s in order to reach the next target at 229.20s, and the point at 226.58 seems to offer good demand for the pair.

EUR/JPY

The Euro also declined against the Yen, as the pair is yet to gather some momentum in order to continue the upside general trend, as the targets are still at the 163.70s then at the 165.95s levels, the technical indicators are showing an upside potential, and the point at 161.52 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound, as the pair continued the 38.2% correctional move on febunacci's retracement, and it seems the pair now is ready to gain again to continue the pair's upside general trend, the first target should be the 0.7150s level, and the point at 0.7110 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency started with a bearish day last week since it lacked bullish momentum which played a significant role in taking the euro down to reach the important support level at 1.4630s, creating a new downside correction. Today we expect the euro to progress towards the downside correction. The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4520. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370

gbp

The British pound drove through the downside channel last week since it was unable to breach the major resistance level at 2.0700 to reverse back to the downside in terms of correctional movements to extend the downside channel for today. The trading range for today might be between the key resistance level at 2.0700 and the key support level at 2.0450.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect selling sterling below 2.0585 with a target at 2.0490 stop loss above 2.0635.

jpy

The dollar against the Japanese yen rallied to the upside direction last Friday to set the upside target at 112.10 in form of an upside projection after it passed the key level at 110.70s. The technical parameters indicated the upside target as they confirmed the upside signals. The trading range for today will be between the key resistance at 112.50 and the key support at 108.20The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.
We expect buying USD/JPY above 111.00 with a target at 112.00, stop loss below 110.50.

Major Market Movers

The Week's Closure…

Another week has come to an end in the Forex market, new data were revealed, and the truth we used to hold has changed, no more doubts about a rate cut in the next FOMC meeting; no more looking for a bottom in the housing market yet, no more carry trades with all the risks in the markets.
We all saw very frustrating housing data this week and even in the week before, hinting for nothing but even more dark future for the U.S. economy driven by the housing slump, and now even those who stood for the dollar before are now definitely against it. Both the fed's chairman and the vice chairman clearly hinted for investors for further policy easing in their next meeting on December 11, stating that the economical imbalances are just increasing with all the turbulence we see, and they are willing to mitigate those problems in the financial markets which affected consumer spending and the banking sector massively.Today, we are having the week closure with fed's favorite inflation gauge, the core yearly PCE is expected to remain well below the fed's comfortable range, 1.8% is the expected reading for the month of October on the year on year basis, the same levels we saw in September, still making the feds comfortable with any rate cuts they are making.Later today, we will be waiting for the Chicago Purchasing Mangers' index for the month of November, another measure for the manufacturing status in the United States, how badly it got affected by the market turbulence and the housing slump. Chicago PMI is expected to climb to 50.5 from 49.7 in October.Dear reader, more dollar weakness is still on the run as we can see, maybe investors are a little bit shy to sell more dollars now at those currencies levels, but trust me, when the wave starts again, new levels will be achieved, unless something major happens to prevent it, the dollar ship is sinking badly, and it's taking everyone on board down with it...

Crosses Technical Analysis

GBP/JPY

The Pound declined against the Yen after reaching the strong resistance around the 229.20s, the pair needs some momentum to reach the next target at 227.95s then if breached the 229.50s level , the general trend is to the upside, and the point at 226.50 seems to offer good demand for the pair.

EUR/JPY

The Euro also dropped against the Yen as the pair couldn't breach the resistance level at 163.62, yet the general trend remains well to the upside, and targets are set at the 163.65 then 166.35, and the point at 161.83 seems to offer good demand for the pair.

EUR/GBP

The Euro gained slightly against the Pound to continue the pair's upside general trend, the next target is set at the 0.7186, yet the pair lacks some momentum to reach the upside targets, and the point at 0.7123 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency started yesterday with a bearish pattern as it lacked enough bullish momentum to breach the key resistance level at 1.4840s. This move confirmed the correctional wave to show some tendency to reach the levels of 1.4600 support in the short term period. The trading range for today might be between the key resistance level at 1.4850 and the key support level at 1.4650. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.
We expect selling Euro below 1.4775 with a target at 1.4675, stop loss above 1.4845.

gbp

The British pound yesterday dropped massively due to the sell-off of the currency as the investors lacked trust in the upside wave which resulted in the pound giving the opportunity to the bears to take the pound down until the upside trend line levels at 2.0540s in the upcoming period. The trading range for today might be between the key resistance level at 2.0800 and the key support level at 2.0500.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400.
We expect selling sterling below 2.0660 with a target at 2.0550 stop loss above 2.0720

jpy

The dollar against the Japanese yen moved in a balanced movement yesterday failing to break through neither the key resistance at 110.40 nor the support at 109.40. Nevertheless, the expected move for the pair today could be to the upside direction as the upside technical signals confirmed yesterday. The trading range for today will be between the key resistance at 111.50 and the key support at 108.20The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.
We expect buying USD/JPY above 109.70 with a target at 110.70, stop loss below 109.30.

Major Market Movers

Behind The Scenes

Fundamentals today reveal the shocking state of minds consumers are in as durable goods readings came out surprisingly low indicating that consumers and businesses lost their trust in the US economy.
Such declines alerts all analysts and economists as the expected or let's say normal reaction is for the Fed's to consider cutting rates as fewer investments will indeed decrease spending in the economy hence slows down or lowers growth despite booming exports.Some of the details of the data indicate that the durables report is notoriously volatile and it wouldn't be likely that the Feds will overreact to such news. However with the weakness of capital spending and the expectations of a cover up of the growth losses caused by the housing slumps which unfortunately didn’t happen, strategies will have to be changed to overcome the problem.Orders for computers and other electronics excluding semiconductors dropped 8.4%, shipments which feed directly into the gross domestic product fell 1.2%. With demand for high technology goods weakening, orders for US made durable goods fell for the third straight month in October, falling 0.4%October's sales of previously owned homes plunged 1.2% to 4.97 million units from downwardly revised previous of 5.03 million units as the previously given was of 5.04 million, sales came lower than median estimates of 5.00 million marking the lowest since 1999 though more homes came on the marketThe fundamentals in the market don’t indicate a further decline in sales as analysts expect that low mortgage rates and job growth should keep sales from falling. However if sales continue to decline, that would be a major concern as it would raise the risk of an economic recession. Sales were lowest in the west region as sales plunged 4.4%. Viewing all the data above, we could only conclude that the final call will be for the Feds and their decision upon the upcoming December rate decision in which it is likely that we witness a further cut in rates but tomorrow is a new a day and a new day is sure full of surprises.

Crosses Technical Analysis

GBP/JPY

The Pound declined against the Yen with the start of today's trading as investors reduced their carry trades, yet the general trend remains to the upside, the pair reached both targets we talked about before yet couldn't hold above those levels, the first target now is set at the 225.50s level, and the point at 223.32 seems to offer good demand for the pair.

EUR/JPY

The Euro also declined against the Yen as investors reduced their carry trades, the general trend for the pair is still to the upside, and targets now are set at 161.70s then 162.30s, the pair lacks some momentum to reach the previous mentioned levels, and the point at 159.90 seems to offer good demand for the pair.

EUR/GBP

The Euro seems to be consolidating against the Pound, as the pair is yet to gather some momentum to progress the upside general trend, though we witnessed a slight correction but the pair is expected to incline again as the long term indicators are favoring the Euro, and the point at 0.7144 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency declined yesterday after it jumped to the key resistance at the levels of 1.4920s to reach as low as the key support level at 1.4800s. This move affected the technical oscillators indicators to reflect some bearish movements in the upcoming period. The trading range for today might be between the key resistance level at 1.4950 and the key support level at 1.4720. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect selling Euro below 1.4850 with a target at 1.4775, stop loss above 1.4900

gbp

The British pound yesterday fluctuated with a neutral pattern as it couldn't pass the tough resistance level at 2.0750s despite it dropping to reach the key support level at 2.0640s without being able to break it. Therefore, we expect bearish movements towards the downside today as the pound lacks bullish momentum. The trading range for today might be between the key resistance level at 2.0820 and the key support level at 2.0500.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect selling sterling below 2.0720 with a target at 2.0600 stop loss above 2.0770

jpy

The dollar against the Japanese yen replaced the bearish movements two days ago with a strong bullish pattern with high levels of volume to take the pair up near the significant resistance level at 109.15. Meanwhile, the technical directional studies showed the upside potential for the short term. The trading range for today will be between the key resistance at 110.70 and the key support at 107.20The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.

Major Technical Analysis

euro

The European currency rallied last week to the upside target at 1.4970s after it penetrated the major resistance level at 1.4920s. However, the euro fell massively to replace the bullish move with a bearish one to close below the opening level at 1.4830s forming a bearish pattern. Therefore as a result, we expect downside movements for today. The trading range for today might be between the key resistance level at 1.4920 and the key support level at 1.4700. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect selling Euro below 1.4870 with a target at 1.4720 stop loss above 1.4920.

gbp

The British pound last Friday fluctuated in wide ranges due to the high levels of volatility allowing the pound to hit the upside resistance as high as 2.0760s to reverse back to the downside until the major support level at 2.0515. Yet the pound indicated the neutral trend with minor tendency to the downside. The trading range for today might be between the key resistance level at 2.0770 and the key support level at 2.0480.The general trend is up as far as 1.9950 remains intact targets now at 2.1170 and 2.1420
We expect selling sterling below 2.0660 with a target at 2.0520 stop loss above 2.0700.

jpy

The dollar against the Japanese yen tended to the downside last week hitting a new low at key support level at 107.40s extending the downside channel. Despite it reversing back to the upside in the last trading sessions, the technical directional studies still give the continuation pattern to the downside. The trading range for today will be between the key resistance at 109.00 and the key support at 107.00.The general trend is down as far as 118.00 remains intact, targets at 106.45 and 104.80.
We expect selling USD/JPY below 108.50 with a target at 107.40, stop loss above 109.00.

Crosses technical analysis

GBP/JPY

A huge selling wave took place on majors yesterday, including the Pound which dropped heavily against the Yen, the general trend is still to the upside, yet the short term indicators haven't shown any reversal from its downside trend, and the point at 225.38 seems to offer good demand for the pair.

EUR/JPY

The Euro was also affected by the selling wave, dropping against the Yen as well, the pair now completed the 50.0% correction on the Febuancci retaracement, yet the general trend remains well to the upside, and the point at 159.51 seems to offer good demand for the pair.

EUR/GBP

The Euro continued to gain against the Pound, as the pair reached the target at 0.7080s, and now the next target for the pair will be the 0.7090s level and then might try the 0.7100, the technical indicators are still showing an upside potential, and the point at 0.7050 seems to offer good demand for the pair.

Major technical analysis

euro

The European currency depreciated in a very strong move from the key resistance at the top of 1.4670s to hit the downside support as low as 1.4520s. The technical studies still show the downside correction for today until the levels of 1.4480s support.
The trading range for today might be between the key resistance level at 1.4600 and the key support level at 1.4450.
The general trend is up as far as 1.4060 remains intact targets now at 1.4965 and 1.5000.
We expect selling euro below 1.4570 with a target at 1.4490, stop loss above 1.4610.

gbp

The British pound yesterday opened with a bearish gap indicating the downside direction in terms of correctional movements in the upcoming days. The short term technical signals showed that the pound just reached the first retirements level as low as 2.0580s; therefore, the pound might reverse back to the upside today.
The trading range for today might be between the key resistance level at 2.0700 and the key support level at 2.0480.
The general trend is up as far as 2.0000 remains intact targets now at 2.1160 and 2.1400

jpy

The dollar against the Japanese yen fell in an irregular move towards the major support level at 110.50s breaching the consolidation area that it formed two months ago creating a new downside channel. The technical patterns indicated that the pair is expected to continue in the downside trend today.
The trading range for today will be between the key resistance at 111.00 and the key support at 107.80.
The general trend is down as far as 121.30 remains intact, targets at 108.30 and 106.20.
We expect selling USD/JPY below 110.30 with a target at 109.00, stop loss above 110.80

U.S. Forex Market Commentary

EURO

The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4730 level and was supported around the $1.4555 level. The common currency rocketed to a new lifetime high following negative remarks about the U.S. dollar from a Chinese official. Notably, French President Sarkozy said currency “disarray” could lead to an “economic war.” Many traders are wondering if unilateral or multilateral intervention may be implemented to smooth out some of the move in the U.S. dollar. The Bush administration seems to have a hands-off policy regarding the greenback and does not seem to want to stray far beyond its “strong dollar” mantra. Data released in the U.S. today saw Q3 productivity print at 4.9%, much stronger than the 3.3% rise that was expected and the largest gain in four years. Also, Q3 unit labour costs fell 0.2%, the first decline since Q3 2006 and unit labour costs have risen 4.3% over the past year, down from 5.1% y/y in Q2. The pullback in unit labour costs will please Federal Reserve officials. Traders are generally unsure if the FOMC will ease monetary policy further in December or if they will remain on hold. The Fed’s decision will largely be data-dependent and if a further erosion is seen in the U.S. housing sector, the Fed may be forced to reduce borrowing costs further. Richmond Fed President Lacker reported the Fed “did the right thing” by cutting rates in response to the recent credit market turmoil. Other data released in the U.S. today saw September wholesale inventories up 0.8% with wholesale sales up 1.3%. In eurozone news, German September industrial output was up 0.3% m/m and Germany’s Five Wise Men reported 2008 GDP should slow to 1.9% from an expected 2.6% gain this year. Most traders do not expect the European Central Bank will change interest rates tomorrow. Euro bids are cited around the US$ 1.4560 level.

JPY / CNY

The yen appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥112.75 level and was capped around the ¥114.80 level. Today’s intraday low represents the pair’s weakest showing since 10 September and was just above the 76.4% retracement of the move from ¥109.00 to ¥124.15. There was little in the way of new Japanese news that moved the market and traders instead reacted to market-moving comments from a Chinese official about foreign reserves diversification. Most traders believe Bank of Japan’s Policy Board will remain on hold through the end of the year but the unwinding of short yen carry trades en masse represents the yen’s largest upside risk. The Nikkei 225 stock index lost 0.94% to close at ¥16,096.68. Dollar bids are cited around the ¥112.55 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥165.55 level and was capped around the ¥167.65 level. The British pound and Swiss franc lost ground vis-à-vis the yen as the crosses tested bids around the ¥237.00 and ¥99.70 levels, respectively. The Chinese yuan appreciated sharply vis-à-vis the U.S. dollar as the greenback closed at CNY 7.4421 in the over-the-counter market, down from CNY 7.4530. Today’s closing low represents the pair’s weakest showing since the yuan revaluation of July 2005. Chinese official Cheng Siwei moved the markets today when he said China should diversify its foreign reserves holdings by “buying more strong currencies (such as the euro).”

STERLING

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.1070 level and was supported around the $2.0860 level. The pair established a new multi-decade high as U.S. dollar sentiment worsened further. Most traders believe Bank of England’s Monetary Policy Committee will not change monetary policy tomorrow but are cognizant of the fact that this MPC has not been afraid to surprise the markets with unexpected rate actions. Data released in the U.K. today saw BRC October annual shop price inflation accelerate to its strongest level this year while Nationwide reported October U.K. consumer confidence weakened but remains resilient. Cable bids are cited around the US$ 2.0950 level. The euro came off marginally vis-à-vis the British pound as the single currency tested bids around the ₤0.6965 level and was capped around the ₤0.7000 figure.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1255 level and was capped around the CHF 1.1450 level. The pair reached its weakest level since May 1995. KOF reported Swiss economic growth is expected to decelerate in Q4 and further in Q1 2008. U.S. dollar offers are cited around the CHF 1.1465 level. The euro and British pound depreciated vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6580 and CHF 2.3695 levels, respectively.