Forex - High-Yielders doing very well; US dollar index hits record low

High-yielding currencies which include the Australian and New Zealand dollars, Euro-Yen and Pound-Yen all posted gains while the US Dollar index hit a new low of 78.16. The market has priced in expectations of further rate cuts by the Fed by the end of 2007, as well as a possible rate hike by the European Central Bank in the medium term. Traders continue to forecast continued bad news for the dollar as the broader economy weakens. Key reports today will give the market a better view of inflation and where exactly interest rates may go in the future.

Norway posted a low unemployment figure of 1.8%, down 0.2% from August (2.0%). The announcement came in less tight than expected; however, economists indicate that 1.8% is (positively) low. The Norges Bank did add that concerns of higher inflation still remain a risk and was the reasoning behind the 25 basis point hike in interest rates on Wednesday.

Gold spot hit $739 this morning on continued demand/supply imbalances driven by seasonal jewelry demand from India and China. The precious metal is holding very strong as the dollar remains weak, crude oil holds firm, and uncertainty strangles the financial markets.

EurUsd up trend holds firm above 1.4043. Major support at 1.3936.

GbpUsd 2.0370 is a key level for the pair. Buy the break out. Support holding firm down to 2.0000.

UsdJpy resistance holding at 116.11 and 117.13. Strong support found at 112.60.

UsdChf downtrend still intact. Initial resistance holding at 1.1772 and support at 1.1638.