By GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
The dollar came under pressure after China’s Vice Premier Wang said China supports the measures taken by the EU to stabilise markets. Risk appetite in general got a significant boost from these remarks, which helped to support the euro, the Australian and New Zealand dollars, as well as Asian equity markets. Elsewhere, the BoJ made no change to policy. EURUSD traded 1.3110-1.3194, USDJPY 83.57-83.84. St Louis Fed President Bullard, a non-voter on the FOMC in 2011, said he had some concerns that the Fed’s QE2 program could feed through into higher commodity prices, although he conceded that there has not been very much evidence of this as yet. He also said recent US data could point to a stronger recovery than anticipated. There were no major data releases and there are none scheduled until Dec. 22.
EUR
Greece Prime Minister Papandreou said he is unconvinced that the decisions taken at last week’s EU leaders summit are enough to stabilize the situation.
The ECB settled EUR603 mn of bond purchases last week versus EUR2.67 bn the prior week. The ECB tenders this week will command attention with about EUR200 bn of 3m and 1y tenders maturing on Dec 23.
JPY
The BoJ left policy unchanged at the end of a two-day meeting today. The central bank confirmed that it has begun purchases in all asset categories signaled previously, and that these would continue. The policy statement noted that although core inflation remains in negative territory, the pace of deflation has continued to moderate.
TECHNICAL OUTLOOK
EURUSD BEARISH Move below 1.3061/48 support zone would expose 1.2969. Resistance at 1.3360 USDJPY BULLISH Break of 83.60 exposes 82.84. Resistance holds at 84.51
GBPUSD BEARISH Sell-off found support at 1.5454 ahead of 1.5297. Initial resistance at 1.5645 USDCHF BEARISH Outlook is bearish; support at 0.9548 and then 0.9463 key low.
AUDUSD BULLISH Upside potential expected to target 1.0029; support lies at 0.9841/31 USDCAD NEUTRAL Push through 1.0190 exposes 1.0287; initial support at 1.0103
EURCHF BEARISH Violation of 1.2676 and 1.2649 exposes 1.2500 psychological support. Resistance at 1.2784 EURGBP NEUTRAL Resistance at 0.8553, support at 0.8426
EURJPY BEARISH Pressure on 109.57; a break here would expose 108.35. Resistance at 110.82
Forex Daily Market Commentary provided by GCI Financial Ltd.
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