Forex - G20 agreed on ways to stimulate growth at a meeting in Sao Paulo

Forex News and Events: The Yen fell against the Dollar and the Euro this morning as a rally in Asian shares improved investors' appetite for risk, reducing demand for the Japanese currency. Asian shares were boosted by strong Wall Street gains on Friday and by China's launch of a huge economic stimulus plan on Sunday. The Yen had initially risen against the Dollar on Friday following weak US employment data for October, but gave back gains and retreated after a big bounce on Wall Street later in the day. The Nikkei surged 5.5 percent, buoyed by Wall Street and hopes for US President-elect Barack Obama's upcoming economic policy. Asian equity markets were also boosted after China announced an economic stimulus package on Sunday worth nearly $600bio in what could mark the start of a round of big spending or interest rate cuts by leading economies to stave off recession in many countries.   Following the unveiling of China's large stimulus package, market players are looking out for steps that could impact currencies such as the economic policy to be announced by US President-elect Barack Obama and the Group of 20 leaders' summit in Washington on Saturday. Financial officials from the G20, which includes developing powers such as China and Brazil as well as industrialized nations, agreed on ways to stimulate growth at a meeting in Sao Paulo, Brazil last weekend. They will hold further discussions on the matter on Saturday in Washington. On Friday, the U.S. Labor Department reported that U.S. employers cut 240,000 jobs in October, the 10th consecutive month of job contraction. Last week, EurUsd rose 0.29% to 1.2764. EurJpy was 0.14% higher at 125.50. GbpUsd dropped 2.51% to 1.5673 while GbpJpy lost 2.65% at 154.10. UsdJpy was only 0.14% lower at 98.33. UsdChf rose 1.61% at 1.1768. Analysts say the Yen could bounce back against the Dollar and Euro unless the equities are able to find fresh factors to sustain them as Japanese exporter demand was likely to support the Yen against the Dollar at key levels such as 100.

Today's Key Issues (time in GMT): 06:45 CHF October Consumer Confidence -33 vs -17 07:45 EUR September French Industrial output -0.6% vs -0.4% (mom) 09:00 NOK October Consumer price index 5.2% vs 5.3% 09:30 EUR November Euro zone Sentix Index -34 vs -27.8 09:30 GBP October PPI Core output -0.3% vs -0.1% (mom) 09:30 GBP October PPI Core output 5.1% vs 5.4% (yoy) 09:30 GBP October PPI Input prices -2.6% vs -1.2% (mom) 09:30 GBP October PPI Input prices 17.8% vs 24.5% (yoy) 13:15 CAD October House starts annualized 200k vs 217.6k 13:30 CAD September New housing price index -0.1% vs 0.0% 13:30 USD October Non-manufacturing payroll -200k vs -159k 13:30 USD October Unemployment 6.3% vs 6.1% 15:00 USD September Wholesale inventories 0.3% vs 0.8% 16:30 USD September Pending sales change -3% vs 7.4% 20:00 USD September Consumer credit $-0.4b vs $-7.9b

The Risk Today: EurUsd Market dropped as low as 1.2330 on 28th October and sharply rebounded to 1.3298 high Thursday 30th. This shows actual trading range 1.2330 – 1.3298. On the downside, renewed weakness will open the way down to trendline support 1.2208. Next long-term support holds 1.1640 November 2005 low. Further support holds 1.0739 September 2003 low. On the upside, only a return over 1.4000 (former trendline support) and 1.5000 will release actual pressure and may put key resistance 1.6000 into focus. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3769 14th October high. GbpUsd Market hit 1.5265 low on 24th October and then recovered up to 1.6673 high 30th October. This holds trading range 1.5265 – 1.6673. Strong support holds 1.5279 Monday 24th October low. Deep following supports are 1.4560 trendline and 1.3682 March 2001 low. On the upside, strong resistance holds 1.6673 last weeks high ahead of 1.7144 (38.2% retracement of 2.0158 – 1.5265 3-month drop). Further resistance holds 1.7744 (50% retracement). UsdJpy Market has now recovered up to 99.80 September-October trendline resistance following two weeks ago drop to 90.91 on Friday 24th October. On the upside, only a recovery over 103 upper trendline and 105 pivot point will put focus again on 108 and 110.67 15th August high. Initial resistance holds 99.80 ahead of 100 pivot point. Staying in the current downtrend might open the way down to 79.70 April 1995 low. UsdChf Market posted last week 1.1802 high recovering from Friday 30th October 1.1203 low. Further advance may open the way to 1.1895 October 2007 high and strong resistance. Strong resistance holds 1.1780. On the downside, renewed weakness below 1.1203 Friday low would undermine the current uptrend and reverse through 1.0692 22nd September low and down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5000 P 1.9363 S 103.07 T 1.1895 T 1.4002 M 1.8304 M 100.00 P 1.1802 M 1.3500 P 1.7631 S 99.80 M 1.1780 S 1.2890 1.5860 98.95 1.1730 1.2530 M 1.5279 M 92.77 M 1.1246 M 1.2490 T 1.5265 S 95.75 T 1.0692 S 1.1640 T 1.4560 T 92.00 M 1.0500 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot