DirectFX : Forex Market Update

Forex Market Update

This morning, the greenback is trading higher against most of the major currencies, as risk aversion increased amongst investors over speculation that the US officials would not manage to agree on a deal to prevent a fiscal crisis by the end of the year. Sentiment weakened after the US House Speaker, John Boehner scrapped his so called 'Plan B' to allow higher tax rates on annual income above $1.0 million.

In Asian session today morning, the Pound came under pressure after a report indicated that British consumer confidence fell more than analysts predicted in December. The Pound stayed lower following the release of economic data that showed that Britain's economy grew less than previously estimated in the third quarter.

A separate report showed that UK's public sector net borrowing rose more-than-expected in November, rising to £15.3 billion from £6 billion in the previous month.

In Spain, Deputy Budget Minister, Marta Fernandez Curras, indicated that nation would struggle to meet its 2012 deficit target as a contracting economy hinders the impact of the deepest budget cuts in the nation's democratic history. Meanwhile, the German Finance Ministry stated that the country's economy is going through a "temporary phase of weakness" and may rebound after the first quarter of next year.

Elsewhere, in China the flash MNI business sentiment indicator index dropped to a reading of 52.23 in December, compared to 59.78 in the previous month.

The greenback traded mixed in the New York session yesterday, against the key currencies.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3224 against the USD, 0.16% lower from the New York close, after German consumer confidence data failed to impress investors, as it deteriorated more-than-expected in January. Meanwhile, Irish media reported that the IMF has indicated for the second time this week that Europe must complete its plan to create a banking union to overcome the sovereign debt and banking crisis in the region. During the session, the pair traded at a high of 1.3253 and a low of 1.3180. Yesterday, the EUR traded marginally lower against the USD in the New York session, and closed at 1.3245, following weak consumer confidence reading in the Euro-zone for December.

The pair is expected to find its first support at 1.3171 and first resistance at 1.3287.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6252 against the USD, 0.15% lower from the New York close, after reports showed that the British consumer confidence fell more-than-expected in December. The currency declined further, after reports showed that the UK economy grew 0.9% in the third quarter of 2012, compared to a 1.0% expansion estimated by markets. During the session, the pair traded at a high of 1.6285 and a low of 1.6234. Yesterday, the British Pound traded 0.12% higher versus the Dollar in the New York session, and closed at 1.6276.

The pair is expected to find its first support at 1.6225 and first resistance at 1.6289.

USD JPY

The USD is trading at 84.10 against the JPY at 10:40 GMT this morning, 0.33% lower from the New York close. During the session, the pair traded at a high of 84.46 and a low of 83.86. In the New York session yesterday, the USD traded 0.27% higher against the JPY, and closed at 84.38.

The pair is expected to find its first support at 83.81 and first resistance at 84.43.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9137 against the Swiss Franc, 0.25% higher from the New York close. During the session, the pair traded at a high of 0.9158 and a low of 0.9109. In the New York session yesterday, the USD traded slightly lower against the CHF, and closed at 0.9114.

The pair is expected to find its first support at 0.9094 and first resistance at 0.9169.

USD CAD

At 10:40 GMT, the USD is trading at 0.9915 against the CAD, 0.41% higher from the New York close. Trading trends in the pair are expected to be determined by release of consumer price index (CPI) and gross domestic product (GDP) data in Canada later today. During the session, the pair traded at a high of 0.9916 and a low of 0.9872. Yesterday, the USD traded 0.19% lower against the CAD in the New York session, and closed at 0.9875.

The pair is expected to find its first support at 0.9884 and first resistance at 0.9931.

AUD USD

The AUD is trading at 1.0417 against the USD, at 10:40 GMT this morning, 0.61% lower from the New York close. Sentiment came under pressure, after a leading broker stated that other sectors of the Australian economy, such as housing and retail, are not recovering quickly enough to make up for the rapidly declining mining sector. Earlier the Reserve Bank of Australia (RBA), in its monthly bulletin forecasted weak growth for the nation in 2013, citing continuing weakness in the mining sector, high labor costs and the strong Australian Dollar. During the session, the pair traded at a high of 1.0489 and a low of 1.0416. AUD traded marginally lower against the USD in the New York session, and closed at 1.0481.

The pair is expected to find its first support at 1.0388 and first resistance at 1.0474.

Gold

At 10:40 GMT, Gold is trading at $1647.09 per ounce, slightly lower from the New York close, as the greenback strengthened. This morning, Gold traded at a high of $1651.99 and a low of $1635.80 per ounce. In the New York session yesterday, the yellow metal traded 1.24% lower, and closed at $1647.65.

Gold has its first support at $1631.60 and first resistance at $1666.69.

Silver

Silver is trading at $29.83 per ounce, 0.29% lower from the New York close, at 10:40 GMT this morning. This morning, Silver traded at a high of $30.06 and a low of $29.65 per ounce. Silver traded 3.83% lower against the USD in the New York session, and closed at $29.91.

Silver has its first support at $29.24 and first resistance at $30.82.

Crude Oil

At 10:40 GMT, Oil is trading at $88.83 per barrel, 1.30% lower from the New York close, after talks in the US to avert a budget crisis stalled, reviving worries about demand in the world's biggest oil consumer. Investors wait release of American Petroleum Institute monthly report on oil production to find further cues for direction of oil prices. This morning, Oil traded at a high of $90.13 and a low of $88.68. Yesterday, Oil traded 0.08% lower in the New York session, and closed at $89.96.

It has its first support at $88.16 and first resistance at $90.02.

Economic Snapshot

UK consumer confidence dropped more-than-expected in December, indicates GfK

The survey from research group GfK indicated that its consumer confidence index in the UK fell to a reading of -29.0 in December, from a reading of -22.0 recorded in November. Market had expected the index to fall to a reading of -25.0 in December.

UK GDP revised lower in the Q3 FY2012

UK's gross domestic product (GDP) came in at 0.9% (QoQ) in the Q3 FY2012, from 1.0% in the preceding quarter. Analysts had expected UK's gross domestic product to rise 1.0% in the Q3 FY2012.

UK current account deficit narrowed in Q3 FY2012

On a seasonally adjusted basis, UK's current account deficit narrowed to £12.8 billion in the Q3 FY2012, following a revised deficit of £17.4 billion in the previous quarter.

UK business investment rose unexpectedly in Q3 FY2012

On a quarterly basis, business investments in the UK rose 3.8% in the Q3 FY2012, from 3.7% in the Q2 FY2012. Market had expected business investment to decline 3.5% in the Q3 FY2012.

UK public sector net borrowing increased in November

In the UK, public sector net borrowing increased to £15.3 billion in November, from a borrowing of £6.0 billion in the previous month.

UK index of services retreated in October

In the UK, the index of services declined 1.1% in the three months ended October, compared to a 1.2% rise in the three months ended September.

German consumer confidence to ease in January

In Germany, consumer sentiment is expected to decline to 5.6 in January, from a revised value of 5.8 in December.

French business confidence increased in December

The business confidence indicator for the manufacturing industry in France rose to a reading of 89.0 in December, in line with market estimates and compared to a reading of 88.0 recorded in November.

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