Bernanke hints at further easing, possibly 50 bp cut.
CURRENCY TRADING SUMMARY – 11 JANUARY 2008 (00:30GMT)
·U.S. Dollar Trading (USD) was battered against a number of majors last night as Ben Bernanke signaled the central bank may cut borrowing costs at the next meeting to counter “downside risks to growth”, increasing expectations that the result may show a 50 basis point cut. The NASDAQ was up 13.97 points (+0.56%) whilst the Dow Jones was also up by 117.78 points (+0.92%). Crude oil eased by US$1.65 a barrel to US$94.02.
·The Euro (EUR) surged versus the dollar following Bernanke stating that the Fed was ready to take “Substantive additional action”. In other news, the ECB surprised little by keeping the interest rates on hold at 4%. Overall the EURUSD traded with a low of 1.4643 and high of 1.4813 before closing the day at 1.4791 in the
·The Japanese Yen (JPY) saw BoJ Muto speak on the state of the Economy, undertaking a dovish tone. Muto indicated that the Economy will remain pressured for some time. USDJPY traded with a low of 109.12 and a high of 110.11 in the
·The Sterling (GBP) kept it rates on hold at the MPC meeting as policy makers assessed the effects of last month’s reduction on the economy. Economists now expect the BoE to will wait until next month before lowering rates again as banks rein in lending, damping consumer spending and deepening a slowdown in the housing market. The GBPUSD traded with a low of 1.9543 and a high of 1.9668 before closing the day at 1.9603 in the
·The Australian Dollar (AUD) saw the release of Trade Balance for November narrow from -2983 mln to -2254 mln. The Aussie Dollar in turn rallied versus the USD upon Ben Bernanke comments overnight. Overall the AUDUSD traded with a low of 0.8812 and a high of 0.8962 before closing the day at 0.8955 in the
·Gold (XAU) rose, erasing earlier losses, as the dollar fell against the Euro, boosting the investment appeal of the precious metal. XAU traded with a low of 866.80 and a high of 894.90
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.4588 | 1.4640 | 1.4795 | 1.4825 | 1.4968 |
| USD/JPY | 108.40 | 108.80 | 109.65 | 110.12 | 110.49 |
| GBP/USD | 1.9500 | 1.9542 | 1.9610 | 1.9669 | 1.9763 |
| AUD/USD | 0.8784 | 0.8812 | 0.8960 | 0.8977 | 0.9073 |
| XAU/USD | 853.60 | 866.40 | 891.50 | 897.70 | 899.35 |
·Euro – 1.4795
Initial support at 1.4659 (Jan 7 low) followed by 1.4570 (Dec 31 low). Initial resistance is now located at 1.4825 (Jan 4 high) followed by 1.4859 (Nov 28 high).
·Yen – 109.65
Initial support is located at 108.80 (Jan 9 low) followed by 108.40 (Jan 7 low). Initial resistance is now at 109.83 (Jan 8 high) followed by 110.49 (38.2% retracement of the 114.66 to 107.91 decline)
·Pound – 1.9610
Initial support at 1.9653 (Aug 17 reaction low) followed by 1.9623 (Jun 8 reaction low). Initial resistance is now at 1.985 (Jan 4 high) followed by 1.9898 (Jan 2 high)
·Australian Dollar – 0.8960
Initial support a 0.8705 (Jan 8 low) followed by 0.8667 (61.8% retracement of the 0.8553 to 0.8852 advance). Initial resistance is now at 0.8859 (Jan 9 high) followed by 0.8877 (38.2% retracement of the 0.9400 to 0.8553 decline)
·Gold – 891.80
Initial support at 853.60 (Jan 3 low) followed by 833.90 (Jan 2 low). Initial resistance is now at 891.47 (Jan 9 high) followed by 899.35 (Jan open + Dec range)
