Forex - Automakers bailout plan helped investors shift away from Dollar cash assets.

Forex News and Events: The Dollar fell to a 2-week low against the Euro on Wednesday and the Yen weakened as US lawmakers reached tentative agreement to extend emergency loans to the auto industry, helping to calm investor anxiety. The White House and Congressional Democrats had reached a deal in principle on a $15 billion plan to help automakers restructure and avoid bankruptcy. Stocks rose and investors' rush into safe-haven assets such as US Treasury debt slowed, temporarily undermining the Dollar's appeal and lifting other currencies such as the Euro. The low-yielding Yen also fell on a shift back in favor of currencies and assets that offer higher returns. Analysts said fears of Bank of Japan intervention to prevent too much Yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching Forex moves carefully. Analysts were quick to point out that the uncertainties facing the global economy meant a relapse into risk aversion was still likely. One sign of just how parlous the economic outlook is came when China said its exports and imports shrank unexpectedly in November, sparking fears that global demand has vanished. EurUsd was up 0.67%at 1.3014 after hitting 1.3070 high. EurJpy rose 1.22% to 120.82. UsdJpy was up 0.54% 92.84. UsdChf dropped 0.51% to 1.1993. GbpUsd was up 0.28% 1.4796. GbpJpy rose 0.81% to 137.35. While an auto deal looked set to pass the House of Representatives, some Republicans sowed doubts about possible snags in the Senate. That weakened stock markets and helped the Dollar and Yen pare some of the losses seen earlier in the session. In the longer run analysts expect the Dollar's rise to fade next year as markets stabilize and investors stop seeking relative safety in the US currency. The Euro and Sterling, for instance, fell sharply as the euro zone and British economies slowed and their Central Banks cut interest rates.

Today's Key Issues (time in GMT): 00:00 TRY Turkish Market Holiday 08:30 CHF Swiss National Bank interest rate decision 0.5% vs 1% 08:30 SEK November Unemployment 6.2% vs 5.7% 11:00 GBP December CBI trends – orders -44 vs -38 13:30 USD November Export prices -1.5% vs -1.9% 13:30 USD November Import prices -4.9% vs -4.7% 13:30 USD weekly Initial claims 525k vs 509k 13:30 USD October International trade -$53.5b vs -$56.47b 13:30 CAD October Exports C$41.6b vs C$42.51b 13:30 CAD October Imports C$38.1b vs C$38.02b 13:30 CAD October New Housing price index -0.1 vs 0.1% 13:30 CAD October Trade Balance C$3.45b vs C$4.49b 15:00 USD Treasury’s Kashkari testifies at house committee 22:45 NZD October Retail ex-auto 0.8% vs -0.5% (mom) 22:45 NZD October Retail sales 0% vs 0.1% (mom) 22:45 NZD October Retail sales 1.1% vs 2.2% (yoy)

The Risk Today: EurUsd Market is trading in the last 6-week trading range 1.2330 – 1.3298 but trying to break up the triangle consolidation pattern. This may open the way to 1.3500 target equal to 1.3302-1.2334 spread. On the further 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 1.3081 25th November high. On the downside, renewed weakness below 1.2430 21st November low may 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. GbpUsd Market dropped as low as 1.4471 last week in current 5-month downtrend dropping from Mid-July 2.0158 high. Strong supports hold 1.3682 March 2001 low. On the upside, strong resistance holds 1.6673 30th October high ahead of 1.7080 (38.2% retracement of 2.1161 – 1.4558). Further resistance holds 1.7860 (50% retracement). Trading range is set between Tuesday 25th 1.5534 high and 1.4471 December low, respectively initial resistance and support. UsdJpy UsdJpy remains under pressure hitting 91.60 low on Friday. Strong support holds 90.91 24th October low. Further downtrend may open 79.70 April 1995 low. On the upside, strong resistance holds 100 pivot point, but 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 97.43 24th November high. UsdChf Market hit 1.2298 high on 21st November. Further strength may look for 1.2463 strong resistance ahead of 1.2506 (61.8% retracement of 1.4278 – 0.9639 decline). On the downside, renewed weakness below 1.1831 initial support and 1.1203 30th October 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 S 1.7080 S 103.07 T 1.2506 S 1.3500 P 1.6673 S 100.00 P 1.2470 T 1.3081 M 1.5534 M 97.43 M 1.2298 M 1.3105 1.4820 92.20 1.1930 1.2490 T 1.4470 M 92.00 M 1.1831 M 1.2308 M 1.4042 S 92.77 S 1.0692 S 1.1640 T 1.3682 T 90.91 S 1.0500 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot