DIRECTFX : Economic Snapshot

Forex Market Update

This morning, the greenback is trading higher against most of the major currencies, as investors remain cautious ahead of a last round of negotiations to avoid the US 'fiscal crisis'. The US President, Barack Obama is to meet congressional leaders later today for talks on a 'fiscal cliff' deal to avoid automatic tax increases and broad spending cuts that threaten the US economic recovery.

The Euro edged lower after France trimmed its third-quarter growth reading to 0.1% in the Q3 FY2012 from 0.2% previously estimated. Moreover, retail sales in Spain plunged 7.8% (YoY) in November, the 29th monthly fall in a row.

The Yen came under pressure, as weak economic data released this morning, fuelled speculation of further easing measures by the Bank of Japan (BoJ). Data released showed that the Japanese manufacturing activity contracted in December at its fastest pace in more than three years, while core consumer prices fell last month and industrial output plunged 1.7% in November.

In today's trading session, the US pending home sales and Chicago purchasing managers' index (PMI) are the key economic releases on tap. Market anticipated the pending home sales to show drop in November, while the Chicago purchasing managers' index to rise in December.

The greenback traded higher in the New York session yesterday against the key currencies, as risk aversion increased after Senate Majority Leader, Harry Reid, stated that "nothing's happening" in regards to talks to avert automatic spending cuts and tax increases.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3174 against the USD, 0.48% lower from the New York close. In economic news, the consumer spending in France increased 0.2% (MoM) in November, while French gross domestic product growth slowed in the third quarter of 2012. During the session, the pair traded at a high of 1.3258 and a low of 1.3166. Yesterday, the EUR traded 0.33% lower against the USD in the New York session, and closed at 1.3237.

The pair is expected to find its first support at 1.3131 and first resistance at 1.3251.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6087 against the USD, 0.11% lower from the New York close, as speculation that the US lawmakers would fail to reach a deal to avoid the 'fiscal cliff' dented investor sentiment. During the session, the pair traded at a high of 1.6129 and a low of 1.6077. Yesterday, the British Pound traded 0.41% lower versus the Dollar in the New York session, and closed at 1.6104.

The pair is expected to find its first support at 1.6035 and first resistance at 1.6172.

USD JPY

The USD is trading at 86.22 against the JPY at 10:40 GMT this morning, 0.14% higher from the New York close. The Yen dropped, as weak Japanese economic data fueled expectations for policy easing by the Japanese central bank. During the session, the pair traded at a high of 86.65 and a low of 85.95. In the New York session yesterday, the USD traded 0.34% higher against the JPY, and closed at 86.11.

The pair is expected to find its first support at 85.75 and first resistance at 86.67.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9173 against the Swiss Franc, 0.45% higher from the New York close. During the session, the pair traded at a high of 0.9183 and a low of 0.9117. In the New York session yesterday, the USD traded 0.36% higher against the CHF, and closed at 0.9132.

The pair is expected to find its first support at 0.9117 and first resistance at 0.9206.

USD CAD

At 10:40 GMT, the USD is trading at 0.9947 against the CAD, marginally lower from the New York close. The Loonie witnessed losses earlier, amid concerns over the US budget negotiations to avoid the 'fiscal cliff'. During the session, the pair traded at a high of 0.9958 and a low of 0.9936. Yesterday, the USD traded 0.37% higher against the CAD in the New York session, and closed at 0.9951.

The pair is expected to find its first support at 0.9914 and first resistance at 0.9970.

AUD USD

The AUD is trading at 1.0382 against the USD, at 10:40 GMT this morning, slightly higher from the New York close. During the session, the pair traded at a high of 1.0394 and a low of 1.0361. AUD traded marginally lower against the USD in the New York session, and closed at 1.0379.

The pair is expected to find its first support at 1.0355 and first resistance at 1.0402.

Economic Snapshot

French GDP expanded 0.1% in the Q3 FY2012

On a quarterly basis, the French gross domestic product expanded 0.1% in the Q3 FY2012, compared to a 0.2% expansion previously estimated.

French consumer spending rose unexpectedly in November

On a monthly basis, consumer spending in France increased 0.2% in November, following a revised 0.1% fall in the previous month. Analysts had expected spending to remain unchanged.

Spanish retail sales decreased at a slower rate in November

Retail sales in Spain dropped 7.8% (YoY) in November, after declining 9.7% in the previous month. Market had expected a 10.3% fall.

Italy's domestic producer price index rose in November

The domestic producer price index (PPI) in Italy rose 2.2% (YoY) in November, slower than a 2.6% rise in October. Market had expected the rate of inflation to ease to 2.1%.The overall PPI was up 2.0% annually, compared to a 2.3% increase in the previous month.

Japan labour cash earnings fell more-than-expected in November

On a seasonally adjusted annual basis, Japanese wage earners' labour cash earnings fell 1.1% in November, from a downwardly revised 0.4% decline recorded in October. Market had expected average cash earnings to fall 0.4% in November.

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