MARKET SUMMARY – 20/12/05(03.00GMT)
- The Dollar was relatively stable yesterday amidst thinning liquidity and scant data releases. The big movers overnight were the commodity currencies –AUD, CAD and NZD, which suffered as long positions in these currencies continued to be reduced. Other high yielders such as the GBP suffered as well against the dollar. On the data front, the monthly housing market index clearly showed weakness in December as it slipped sharply to 57 but had little impact on the dollar. Looking forward, November PPI and housing market starts are the key releases today. Markets are looking for core PPI to come stronger by 0.2%, while house starts are seen slowing down to 1.95 million.
- The Euro traded in a range of 1.2037 to 1.1974, before closing near 1.2000 in
New York
- The Japanese yen traded higher overnight after easing in Asian trade yesterday. The Japanese yen rose from JPY116.58 per US dollar to JPY115.88, before closing near 116.00 in
New York
- The Pound traded down from 1.7729 to a low of 1.7618, before closing at 1.7640 in the
New York
- The Aussie like all commodity currencies lost ground overnight, falling from 0.7469 to a low of 0.7400 before closing at 0.7410 in
New York
TECHNICAL COMMENTARY
Euro – 1.1980
Price action remains on the choppy after the initial move higher earlier in the week, however the path remains open toward the minor resistance area at 1.2085 (Nov 2 reaction high). The next big resistance area is in the 1.2174 (Oct 27 reaction high) to 1.2208 (Oct 6 reaction high) to 1.2226 (61.8% of 1.2590 to 1.1638) area. For the near term, support remains in the 1.1924 (38.2% of the gains from 1.1702 thus far) to 1.1906 (Tuesday’s reaction low) area.
- Yen – 116.30
The massive slide from 121.41 extended a bit below 115.99 (Oct 19 high). Only a break of this support would bring up the possibility of a broader bear trend taking hold. For now, it would take a move above the 117.70 (reaction high from yesterday) to 117.96 (38.2% retracement of the slide since 121.41 thus far) to mark something more than just a relief rally unfolding.
- Pound – 1.7600
Sterling continues to consolidate between 1.7640 and 1.7740, only a move below the 1.7493 to 1.7462 congestion zone from late last week would put the rise from 1.7048 (Nov 28 low) on hold. Until then, keep focus on the 1.7901 (Oct 27 reaction high) to 1.7947 (61.8% retracement of the 1.8501 to 1.7052 decline).
- Aussie – 0.7390
The rally from 0.7261 (Nov 14 low) stalled just as it reached the 0.7572 (61.8% of 0.7762 to 0.7264) to 0.7601 (Oct 27 high) resistance band. The pullback from the 0.7580 recent high pushed through initial support at 0.7495 (61.8% of 0.7442 to 0.7580), and the 0.7458 (38.2% of 0.7261-0.7580) to 0.7442 (Dec 7 low). This could possible confirm a departure from this bull channel, targeting 0.7383 (61.8% of 0.7261 to 0.7580). Only a move above 0.7533 (61.8% since 0.7580) would relieve the current downward pressure.
