Market Updates
The USD is showing signs of being able to hold onto the recent gains, which raises the question of whether or not the greenback can work even higher here. The CAD is a useful gauge, see if 1.00 can be regained (favored) for 1.01, then to 1.04 in time. For the EUR/USD the key will be working below $1.47 for $1.4460, then lower after all as upticks should be finding $1.48 offering resistance now. Cable? Lagging as the EUR/GBP cross works lower, but Cable should be dragged down towards $2.05, upticks are expected to find $2.07 offering resistance just now, but the spikes this week have seen $2.08+ pressed, choppy markets remain the risk… For EUR/GBP the bias remains on a push below 0.71 for 0.7030/00 and lower, upticks should hold 0.7160 area res. ahead of 0.7180 and the 0.72+ zone. Yen? Big question mark here as the ties to the equity market swings remains a puzzle. For choice leaning to the USD pushing towards Y112, then to 118 in time, see if 109.30/00 continues to hold on USD dips. EUR/YEN found breaking below 160 tough, but for choice 163+ should draw out sellers, still like 160/158 giving way but if USD/YEN is catching a bid, 158/165 may be the range for a while. Watch the cross high yield plays, NZD/CAD holding above 0.76 just now, pressure towards 0.80 should be building. Data? Plenty on offer today, but focused on the US PCE and personal income/spending numbers, with next weeks payrolls now looming. USD bulls? Need to see decent numbers coming through, and funny enough Fed rate cut risk seems to not be a drag on the USD just now, funny old world. Where to hide? Still like EUR/CHF upside for 1.68, see if the turn above 1.65 can build…
The Fed is ready to cut the interest rates.
It is very necessary the Federal Reserve to cut the interest rates again to stimulate the U.S. economy. The speculations for such interest rates cut became stronger after Bernanke raising the speculations. On December 11th the Fed is ready to cut the interest rates. After the prior Fed decision when Bernanke was firm with the words that would keep the interest rates politic firm for a longer time, we at World-Signals.com do not believe him. The Fed is necessary to cut the interest rates again and probably by the Fed is already agree with such correction. There are chances for new aggressive interest rates cut with half percent to be one cut but effective cut.
Market News
The USD firmed a touch in London morning trade, with the EUR losing $1.48 early on, CHF bouncing towards 1.12. Commodity currencies have not rallied much off the softer yen today, chances are that the USD is finding buyers above AUD 0.88, NZD 0.77 and below CAD 0.99 just now. The EUR/CHF should be set to clear 1.65 for 1.66 in the near term, risk aversion plays being taken off should see 1.68 in time. Data today has been sidestepped, with oil prices rocking higher on a pipeline explosion/shut down in Canada. Look for the price to tumble as trades take on board the likelihood that it will be a limited shutdown, inventories are ok, and it’s the ‘wrong sort of crude’ as well. Data this afternoon will be ignored as well unless new home sales comes in sharply lower (or higher?). PCE on Friday (monthly) will be watched (because the Fed watches it…) while jobs next week should add color to the US economy story… On the charts favoring the USD/YEN to push away from 110 towards 112, while the EUR/USD is expected to drop below $1.47 for $1.46, then $1.4460//lower. EUR/GBP bounced a touch, look for 0.7160 to offer res., a break to 0.71 for 0.7030/00 should be on next if 0.72+ was the peak (favored). Bottom fishing? NOK/SEK, broke down nicely, aiming for a bounce here, keep risk below 1.15 for 1.18…
Expecting EUR/USD at 1.50 this week.
The dollar was across the board since Friday and continues to take ahead this early morning. But this process is temporary, as most of the traders will prefer to sell dollars at these low levels having a mind the record from Friday. Many traders believe that the dollar will fell at the levels of 1.50 and would not stop to lose against the major currencies. World-Signals.com recommends coming into long positions of EUR/USD with target above 1.50. The level of 1.50 has to see this week. The chances for continue dollar recovery like the recoveries from Friday afternoon are very low.
The clever investors start to accumulate dollars again.
The world biggest economy succeeds to narrow the trade deficit. The low U.S. Dollar help to the exporters and that cause the low U.S. trade deficit. The low level of the dollar causes the effect by the narrow trade deficit. The Bush administration will continue to hold the dollar at very low levels till the end of Bush as president. The Federal Reserve is ready to cut the interest rates again on December 11th 2007 with quarter a percent but the forecast in World-Signals.com is for new aggressive interest rates cut in 2008 down to 3.50%-3.75%. After that the U.S. economy will start to overtake the crisis while Europe and the rest world will come into deep recession. Some of the investors are already in process of accumulating dollars in a very long-term trading process while in 2008 the dollar will start to gain. Till then the EURUSD will continue with target of 1.50 even to 1.55 while the pound should break 2.18 against the dollar.
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