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Global Economic Recovery Boosts Demand for Certain Currencies

UFXBank Research from UFX Bank at 01/12/10


Daily Review 12/01/2010

USD Dollar (USD) – The Dollar remained weak against most currencies, as a risk appetite has been triggered and signs of a global economic recovery boosted demand for higher-yielding and commodity linked currencies. Wall Street finished mixed as Dow Jones rose by 0.43% and NASDAQ depreciated by -0.21%. Crude oil rose to new high during the session but then dropped and closed with -0.62% change at 82$ a barrel. Gold (XAU) soared and closed at 1150.7$ an ounce. Today, The Trade Balance index is expected at -34.5B vs. -32.9B previously.
EURO (EUR) – The Dollar traded at almost a 3 week low against the Euro on increased speculation that the Federal Reserve will maintain its policy of keeping interest rates at their record lows as the U.S. labor market remains weak. The French Industrial Production came out 1.1% better than 0.4% expected. EUR/USD has been struggling to remain above 1.45 and has a major resistance at 1.47 as the 50 and 100 moving day averages collide. As long as it holds above 1.4480 the Euro remains bullish. Overall, EUR/USD traded with a low of 1.4401 and with a high of 1.4555. Today, no economic data expected.
EUR/USD – Last: 1.4505

Resistance 1.456 1.459 1.463
Support 1.448 1.444 1.4415

British Pound (GBP) – The Pound gained slightly versus the Dollar as stocks advanced on signs the global economic recovery is gathering momentum. RICS House Price Balance came out weaker than expected with 30%. GBP/USD is struggling to remain above its 200 day moving average and along with a break above 1.6240 could send the pair to a rally. If unsuccessful the Pound is expected to turn back down and test the 1.59 support again. Overall, GBP/USD traded with a low of 1.5995 and a high of 1.6192. Today, the Trade Balance index is expected at -7B vs. -7.1B previously.
GBP/USD - Last: 1.6095

Resistance 1.618 1.6225 1.625
Support 1.607 1.6035 1.5985

Japanese Yen (JPY) – The Dollar declined against the Yen but found support at 91.8.Current Account came out stronger with 1.3T versus 1.22T expected, but M2 Money Stock came out weaker with 3.1% versus 3.3% prior. USD/JPY will try to hold above the 91.8 support level and if successful could bounce back to 93. The USD/JPY is trading in a narrow range and traders are waiting for a trigger to set the movement. Overall, USD/JPY traded with a low of 91.80 and a high of 92.67. No economic data expected today.
USD/JPY-Last: 92.2

Resistance 92.4 92.7 93.1
Support 91.8 91.5 91.25

Canadian dollar (CAD) – The Canadian Dollar fell versus the Dollar after the pair has found support at the 1.0250 level. Crude oil, the nation’s biggest export, retreated from a 15-month high. The Housing Starts came out 175K better than 160K expected. Building Permits came out -4.6% worse than -1% expected. On the technical view, if the 1.0250 level sustains a rebound to 1.04 could be seen. Overall, USD/CAD traded with a low of 1.0253 and with a high of 1.0342. Today, the Trade Balance index is expected at 0.9B vs. 0.4B previously.
USD/CAD - Last: 1.0340

Resistance 1.0385 1.041 1.045
Support 1.0285 1.025 1.0205

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