Daily Forex Snapshots

US Session: Western European Currencies Rally Strong Before Year-End.

December 29, 2008 6:39 PM CET

G10 Advancers and Decliners vs USD

	Sek	2.81
	Chf	2.51
	Aud	1.40
	Nok	1.40
	Dkk	1.26
	Eur	1.26
	Nzd	1.00
	Jpy	0.66
	Cad	0.31
	Gbp	-0.05

Global Indexes

Current Level

% Change

FTSE futures	4,275.50	+ 1.99
CAC futures	3,137.50	+ 0.50
DAX futures	4,725.50	+ 1.28
SMI Futures	5,398.00	+ 1.14
DJIA futures	8,390.00	- 0.97
S&P future	859.70	- 1.06
Nasdaq futures	1,166.50	- 1.85

World Markets

Current Level

% Change

Crude wti	38.26	+ 1.46
Gold	877.85	+ 0.98
Silver	10.94	+ 2.24
USD Index	80.32	- 0.71
VIX	45.65	+ 5.23

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 2: 0.7231
R 1: 0.7145
R 1: 0.6990
CURRENT: 0.6883
S 1: 0.6855
S 2: 0.6818
S 3: 0.6741

EURJPY
R 3: 131.35
R 2: 127.89
R 1: 129.63
CURRENT: 128.60
S 1: 128.43
S 2: 128.20
S 3: 128.01

USDSGD
R 3: 1.4956
R 2: 1.4675
R 1: 1.4562
CURRENT: 1.4404
S 1: 1.4274
S 2: 1.4182
S 3: 1.4084

Market Brief

The dollar is mostly flat in the last week of 2008, not much is anticipated before the New Year. The EurUsd surged a bit over 200 pips to the mid range of 1.42, while the UsdJpy slid 70 pips finding support near 90. The GbpUsd is trading close to its previous close, and little news is set to be released in the UK. Equity markets are mixed with the US stock indexes negative in the today’s session breaking 2 consecutive days of gains, but positive throughout Europe. Bond yields tightened across the curve with the 2yr rate down 10bps to .78%. Commodities are the most active asset class in today’s trading session, with oil higher by 1% at $38bbl and gold up 1.13% at $879oz.

The largest movers in the FX space were the Euro and Chf, which posted strong gains against major crosses. There was no economic data released in the Eurozone, but more mixed commentary from the ECB regarding their monetary policy outlook. A large consensus of Analysts believe the ECB is way behind the curve, and will have to accelerate the pace of easing to be consistent with it’s their counterparts in the US and UK. Buying in Eurobonds may become more attractive while rates are still higher abroad, and would be great opportunity for some investors to go long as the US treasury bubble bursts. The purchasing of Eurobonds would bolster the Eurodollar, as capital inflow would revert to that region.

Watch the Case and Schiller index, it is a key component in timing a recovery in the US financial crisis. A strong degree of correlation between the equity markets and home prices has persisted throughout the downturn. As of now, stock indexes could have bottomed out at current levels, but home prices have yet to lose enough ground to truly be prepared for a turnaround. Once we these factors achieve normalized levels, the dollar should lose significant momentum with a return to risk among investors.

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Asian Session: Dollar retreats on expected earnings data, markets thin but not dormant.

December 29, 2008 8:41 AM CET

G10 Advancers and Decliners vs USD

	NOK	1.866
	SEK	1.671
	AUD	0.933
	CAD	0.833
	CHF	0.745
	EUR	0.618
	DKK	0.603
	NZD	0.408
	JPY	0.191
	GBP	-0.122

Global Indexes

Current Level

% Change

Nikkei 225 Index	8706.91	- 0.37
Hang Seng Index	14205.25	+ 0.15
Shanghai Index	1832.17	- 1.05
FTSE futures	-	- 0.93
DAX futures	-	- 0.26
DJIA futures	8422	- 0.59
Nasdaq futures	1179.75	- 0.74

World Markets

Current Level

% Change

Gold	884.25	+ 1.72
Silver	10.87	+ 1.59
VIX	43.38	- 3.17
Crude wti	38.58	+ 2.04
USD Index	80.503	- 0.48

Todays Calender

Estimates

Country / GMT

GBP BoE Housing Equity Withdrawal	-3.3Bn	-2.8Bn	GBP / 09:30
Swiss KOF Swiss Leading Indicator	-0.26Bn	-0.05Bn	CHF / 10:30

Currency Tech

Market Brief

Asian trading today was very thin across asset classes – currencies no exception to the end of year markets that reign. Despite this, a wealth of data has been driving sentiment along with continued fears of recession in the U.S send the dollar lower. The EURUSD traded up from 1.4090 territory in early trading to as high as 1.4174 before settling into a 1.4140 – 1.4165 range for the remainder of the session. USDJPY saw a steady bear move throughout the day, channeling down to 90.50 territory – after gapping at 90.75 this weekend. The British Pound defied the norm by declining against the dollar after initial gains this morning on the general perception that the British economy is in worse shape than its European neighbors – BoE is expected to cut rates further.

The UAE announced further cuts in its supply this weekend sending crude above $38/bbl. Energy stocks were up in Tokyo, countering the decline led by financials. The last full day of trading for this cataclysmic year saw indices in Asia close practically flat as 2008 draws to a close. Japanese automaker Toyota saw another bearish session as weaker global demand stunts its growth – this comes a week after the world’s no.1 Automaker announced that it would make an operating loss for the first time in its 68 year history.

Australian stocks ventured into negative territory as Miners BHP Billiton and Rio Tinto gave back early morning gains. Retailers however were up as the Christmas season faired better than expected for consumer goods – despite a global economic slowdown. This phenomenon was witnessed across the globe, as retailers were seen massively discounting from the beginning of December in a bid to curb the lack in demand and general slump in sentiment.

Gold is trading higher today as resumed tensions in the Middle East and higher Oil prices send the natural “safe bet” higher. End of year “backwardation” – whereby expiration of futures contracts sends the commodity higher could also be a factor at play.

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