Major Market Movers

4 Economies...1 Throne!
Words by Fed Chairman Mr. Ben Bernanke might be the only hope for the economy as it is now sinking into a recession after the release of some poor data. The world's largest economy is on stake now and it would be reasonable for any other economy to fight to capture the throne…


A speech made by Mr. Bernanke yesterday showed how extremely dovish he was and how they stand firm on acting in a timely manner and are ready to take substantive action to help pick up the growth and performance of the U.S. economy. Now that expectations for growth in 2008 have dampened, the chairman gave signals that allowed markets to place a 50 basis point cut in interest rates in their next meeting which was a bad signal for the number one world traded currency.

What made things worse also was the US Trade Balance for the month of November showed a widening deficit to $63.1 billion worse than the forecasted and prior deficit of $59.5 billion and $57.8 billion. This was the largest deficit since September 2006 as the gap widened 9.3%.

Exports rose 0.4% to $142.3 billion and imports inclined 3% to $205.4 billion but the actual gain was not to due to the amount of exports or imports but simply it was a result of higher prices.

Now that the gap had widened more than expected, analysts now had altered their projections for the fourth quarter growth as they see it had declined more than the 1.2% annual reading they had previously forecasted.

According to the Commerce Department, the problem highlighted in the trade report was the soaring energy prices. For quite some time this was the reason why people thought that the deficit has widened. However, this isn’t true because despite the fact that oil prices have inclined, the real trade gap widened 3% in November excluding petroleum.

The continuing weakening of the U.S. dollar has helped boost exports for the economy as local manufacturers and producers benefited from the higher prices and weaker currency since it is now cheaper for investors using foreign currencies to purchase U.S. goods. However, it was a slap to the imports since it became more expensive to buy goods from abroad and that fact that the economy is losing track in the United States raised some eyebrows.

In seasonally adjusted terms, trade with Canada, Europe and Mexico have declined in November. However, it could start to pick up pace once again after prices of goods from Canada rose 0.6% in December compared to the 5.9% jump in November. And as for goods from Europe, prices inclined 0.6% in December and remained unchanged from November.

In a different report, the US Import Price index for the month of December came in flat slightly lower than the expected reading of 0.1% and worse than the previous reading of 2.7% in which it was revised to the upside to 3.3%. As for the yearly reading, a 10.9% was documented lower both the expected and previous readings of 10.5% and 11.4% respectively. The gain witnessed in November was the most it has gained in 17 years.

The price of imported petroleum declined for the first time since August by 0.6%. Prices of imported capital goods were flat in December after inclining 0.2% in November.

For the meantime, export prices inclined by 0.4% in December after it had previously gained 0.9%. Natural Gas prices also rose 2.8% compared to the jump it witnessed in November by 16%.

Daily Calendar

Thu
Jan 10
12:30am AUD Trade Balance
5:00am JPY Leading Index m/m
7:45am EUR French Industrial Production m/m
7:45am EUR French Government BudgetBalance
9:30am GBP Trade Balance
11:00am GBP Chancellor Darling Speaks
12:00pm GBP Interest Rate Statement
12:45pm EUR Interest Rate Announcement
1:30pm EUR ECB President Trichet Speaks
1:30pm USD Unemployment Claims
1:30pm CAD Building Permits
1:30pm CAD New Housing Price Index m/m
3:00pm USD Wholesale Inventories m/m
6:00pm USD Fed Chairman Bernanke Speaks
6:00pm USD Kansas City Fed President Hoenig Speaks
11:50pm JPY M2+CD Money Supply y/y

Major Technical Analysis

euro

The European currency rallied to the downside with high level of volume to show key weakness for the euro in the upcoming days as it opened the chance again to reach the levels of 1.4580s support area. This occurred after the euro breached the upside minor trend line on the bullish wave.
The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4500.
The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230
We expect selling euro below 1.4690 with a target at 1.4600, stop loss above 1.4750.

gbp

The British pound rallied in the downside direction in a very strong bearish pattern to reach one of the most critical supports level at 1.9550s give the pound the opportunity reverse its main direction if it closes below the mentioned level. Nevertheless, today we see the pound can move in the upside direction to recover some of its losses.
The trading range for today might be between the key resistance level at 1.9700 and the key support level at 1.9460.
The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450
We expect buying sterling above 1.9550 with a target at 1.9660 stop loss below 1.9500.

jpy

The dollar against the Japanese yen jumped in the upside direction after it couldn't drop below the major support at 108.80s to create a bullish wave to hitting a high at 109.70s. The pair today is expected to progress towards the upside direction as the technical indicators showed yesterday.
The trading range for today will be between the key resistance at 111.00 and the key support at 106.80.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Daily Calendar

Date Wed Jan 9
5:54pm (GMT)
12:01am GBP Consumer Confidence Index
12:30am AUD Retail Sales m/m
2:00am NZD ANZ Commodity Price Index
7:00am EUR German Trade Balance
7:00am EUR German Retail Sales m/m
7:45am EUR French Trade Balance
10:00am EUR GDP q/q (r)
10:30am GBP BRC Shop Price Index y/y
11:00am EUR German Industrial Production m/m
12:30pm CAD Chief Economists Speak
1:15pm CAD Housing Starts
2:30pm USD St. Louis Fed President Poole Speaks
3:30pm GBP Leading Index m/m
3:30pm USD Crude Oil Inventories

Major Technical Analysis

euro

The European currency progressed to the upside to confirm the upside potential, yet the technical indicators didn't reflect any bearish movements; taking the currency towards the upside resistance as high as 1.4740s. Today we might see another bullish day for the Euro.
The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4630.
The general trend is up as far as 1. 4060 remains intact targets now at 1.5000 and 1.5370.
We expect buying Euro above 1.4690 with a target at 1.4750, stop loss below 1.4655.

gbp

The British pound yesterday rose in a powerful move passing the major resistance levels at 1.9730, to hit the high at the levels of 1.9830. The technical trend studies, beside the technical oscillators, still show the upside targets so we expect a bullish movement for the pound today.
The trading range for today might be between the key resistance level at 1.9900 and the key support level at 1.9600.
The general trend is up as far as 1.9450 remains intact targets now at 2.1150 and 2.1400.
We expect buying sterling above 1.9690 with a target at 1.9800 stop loss below 1.9650

jpy

The dollar against the Japanese yen fluctuated in both directions with tendency to the upside as the technical parameters indicated that the horizontal support line played a significant role to limit the downside push yesterday. However, the other elements are still applying pressure to the downside so we expect the pair today to remained neutral.
The trading range for today will be between the key resistance at 110.80 and the key support at 118.00
The general trend is down as far as 121.30 remains intact, targets at 109.00 and 107.70.

Crosses Technical Analysis

GBP/JPY

The Pound gained back against the Yen yesterday and continued to incline since early this morning, the short term indicators are showing an upside potential for the par today, the general trend is still to the upside as long the 111 level remains intact, and the point at 215.07 seems to offer good demand for the pair.

EUR/JPY

The Euro also inclined against the Yen yesterday and continued its upside move since early this morning, the short term technical indicators are showing an upside potential, as the general trend for the pair remains well to the upside, the next target is set to be at the 161.40s level, and the point at 160.50 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound in a correctional move that took the pair to the downside, though the general trend is still to the upside, but the pair might continue its downside correctional move, and the point at 0.7425 seems to offer good demand for the pair.

Major Technical Analysis

euro
The European currency failed to move in the upside direction as it faced a solid resistance level at 1.4750s to take the euro down until the levels of 1.4660s support area. In the meantime, the technical oscillators have adjusted to show the downside direction today as it formed some bearish signals which opened a channel until the major support level at 1.4550s.

The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4500.

The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230.

gbp
The British pound yesterday fluctuated in the downside direction to hit the low at the strong support area near the 1.9650s. Nevertheless, the pound tried to gather bullish momentum as it remained trading above the important area at 1.9700; hence we expect the pound today to move in the upside direction as the technical directional indicated.

The trading range for today might be between the key resistance level at 1.9900 and the key support level at 1.9500.


The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450.
We expect buying sterling above 1.9675 with a target at 1.9800 stop loss below 1.9620.

jpy

The dollar against the Japanese yen last time rallied in the upside direction with high levels of volume to hit the major resistance 109.70s. However, it declined in the last session consolidating around the 109.00 levels due to lower volume. Today the pair is expected to move in the bullish side slightly.

The trading range for today will be between the key resistance at 111.00 and the key support at 106.80.

The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.