FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
USD
Asian markets remained in a holiday mood overnight and FX flows were extremely light. News flow too was thin and Japanese economic data was second-tier and not market-moving. USDCNY fixed at a new low, but the adjustment on the previous fixing was minor, and the headline failed to attract much attention. EURUSD traded 1.3043-1.3077 and USDJPY 77.90-78.03. The minutes of the BoJ’s Nov. 15-16 and Nov. 30 policy meetings were released together. The latter was an unscheduled meeting called to discuss the possibility of coordinated action on central bank swap lines – action which was subsequently taken later that day. The board emphasised that Japanese financial institutions were not having difficulty funding themselves in foreign currencies, but that “the possibility could not be ruled out” thatJapan’s financial system could be “adversely affected should conditions in global financial markets deteriorate further”.USeconomic data is due in the form of house prices and the Conference Board Consumer Confidence reading. Impressed by the recent improvement in jobless claims and housing starts, ourUSeconomics team have raised their forecast for Q4 GDP to 3.0% annualised rate from 2.5% previously.
EUR
The ECB announced it settled only EUR0.019 bn worth of sovereign bond purchases in the week ended Friday, down from EUR3.361 bn the week before. This is the slowest pace of buying under the securities markets program since it was reactivated in early August. The total stock of bonds accumulated now stands at EUR211 bn, allowing for the maturation of some of the bonds purchased since the program began in May 2010.
JPY
Finance Minister Azumi said somewhat optimistically that the yen would return to levels reflecting the real state of the economy when the European and other crises are solved. He said the strong yen was partly to blame forJapan’s export weakness in Q4.
TECHNICAL OUTLOOK at 0800 GMT (EDT +0400)
EURUSD BEARISH Initial support lies at 1.2994 ahead of key low at 1.2946. Resistance is at 1.3091, today’s intersection of the trendline drawn off the Oct. 27 high ahead of 1.3197.
USDJPY NEUTRAL Near-term directional triggers are at 78.29 and 77.69.
GBPUSD NEUTRAL Key upside trigger is at 1.5780 with interim resistance at 1.5728. Support lies at 1.5582 ahead of 1.5497.
USDCHF NEUTRAL Resistance is at 0.9415 ahead of key high of 0.9548. Support lies at 0.9307 ahead of 0.9235.
AUDUSD BULLISH Rise through 1.0219 would expose 1.0258. Support lies at 1.0052.
USDCAD BEARISH A break below 1.0168 ahead of key low of 1.0052. Resistance is at 1.0309 ahead of 1.0389.
EURCHF BEARISH Initial support lies at 1.2164, a break below which would expose 1.2123, the Oct. 3 key low. Resistance is at 1.2254.
EURGBP BEARISH Key support is at 0.8303, a decline through which would expose the year-to-date low of 0.8285. Resistance is at 0.8390.
EURJPY BEARISH Key support area is at 101.05/100.76, a violation of which would open the psychological support of 100.00. Resistance is at 102.54.
SCHEDULE
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