- US Dollar: US Dollar Likely to Remain in Choppy Ranges as Volatility Drops
- Euro Unmoved by European Union Summit Press Conference
- British Pound Bounces on Strong UK Retail Sales Figures
- Commodity Dollars Little Moved, Volatility Unlikely Until Next Week
US Dollar: US Dollar Likely to Remain in Choppy Ranges as Volatility Drops
The US Dollar pulled back in a fairly uneventful day of trading, falling as the S&P 500 closed higher for the first time on the week. US economic data proved mixed had little real effect on price action. Homebuilders broke ground on 555k private home construction projects in the month of November—roughly in line with analyst expectations. Yet new Building Permits pointed to future weakness in housing activity as they fell near their lowest in the series’ 50-year history. Traders shrugged off the report as simultaneous US Jobless Claims figures showed a noteworthy decline in fresh unemployment insurance claims on the week, while later Philadelphia Fed index figures likewise proved better than expected.
An effectively empty US economic calendar through Friday and much of the week ahead keeps the spotlight on the S&P and broader moves in ‘risk’ to drive US Dollar volatility. FX Options market volatility expectations unsurprisingly show that few expect major moves out of the US Dollar, but traders should be wary of reduced liquidity and the potential for sharp intraday swings. Recent days emphasize that price can go almost nowhere and yet see 50-pip swings in minutes. Traders should look to reduce leverage amidst adverse market conditions.
Euro Unmoved by European Union Summit Press Conference
The highly-anticipated European Union summit produced few surprises and had effectively zero effect on Euro pairs. Traders were forced to wait until after the New York session close for official commentary from the summit and were likely left unimpressed. Euro Zone Financial Ministers’ chairman Jean-Claude Juncker said that the EU would not enlarge the European Financial Stability Facility (EFSF) fund, while International Monetary Fund involvement is seen likely in any bailouts. Some sighs of relief may have been audible on bond trading desks, as officials likewise said that any bailouts would not involve ‘haircuts’ on debt holders. Yet at the end of the day the Euro traded almost exactly where it had been prior to the press conference. A similarly empty economic calendar in the days ahead leaves the single currency at the whims of broader financial market moves.
British Pound Bounces on Strong UK Retail Sales Figures
The British Pound bounced off of recent lows, boosted by a stronger-than-expected UK Retail Sales report and improvement in UK interest rate forecasts. Upward revisions to previous months’ data provided a spark to Bank of England expectations, and traders now price in 44 basis points of interest rate increases in the coming 12 months. Though this may seem like a relatively paltry sum, it is a noteworthy improvement from just two months ago when rates were expected to remain roughly flat through 2011. To this end, it will be critical to watch the release of the Bank of England’s minutes from its most recent policy-setting meeting. Said announcement could be the most market-moving event among G10 currencies through the week ahead—intensifying focus on recent improvements in BoE rate forecasts.
Commodity Dollars Little Moved, Volatility Unlikely Until Next Week
The Australian, New Zealand, and Canadian Dollars remained roughly unchanged against their US namesake on a fairly uneventful day of trade. Price action is likely to remain quiet for the commodity bloc amidst similarly lackluster moves in broader financial markets. Yet traders should keep an eye on the coming week’s event risk for both the Canadian and New Zealand dollars. The former will see Consumer Price Index inflation figures released on the 21st, while the latter has similarly market-moving NZ Gross Domestic Product figures due the next day. Both enjoy fairly robust interest rate forecasts going into the New Year, and any strong disappointments could potentially remove key appeal for said currencies. Traders should otherwise watch for admittedly unlikely swings in global commodity prices.
ECONOMIC DATA
Next 24 Hours
| Currency | GMT | Release | Survey | Previous | Comments |
| EUR | Italian Current Account (euros) (OCT) | -8123M | Deficit largest since 2008. | ||
| GBP | 0:01 | Nationwide Consumer Confidence (NOV) | 52 | 52 | Fell to 19-month low in Oct |
| EUR | 7:45 | French Own-Company Production Outlook (DEC) | 11 | French business confidence indicator declined in November from October’s two-year high. | |
| EUR | 7:45 | French Production Outlook Indicator (DEC) | 8 | ||
| EUR | 7:45 | French Business Confidence Indicator (DEC) | 102 | 100 | |
| EUR | 9:00 | German IFO - Expectations (DEC) | 106.0 | 106.3 | German business confidence unexpectedly rose to record high in Nov. |
| EUR | 9:00 | German IFO - Business Climate (DEC) | 109.0 | 109.3 | |
| EUR | 9:00 | German IFO - Current Assessment (DEC) | 112.5 | 112.3 | |
| EUR | 9:00 | Italian Industrial Orders s.a. (MoM) (OCT) | 0.6% | -1.2% | Italian new orders declined in September for a third time in the last four months. |
| EUR | 9:00 | Italian Industrial Orders n.s.a. (YoY) (OCT) | 16.0% | 17.9% | |
| EUR | 9:00 | Italian Industrial Sales s.a. (MoM) (OCT) | -0.3% | ||
| EUR | 9:00 | Italian Industrial Sales n.s.a. (YoY) (OCT) | 10.8% | ||
| EUR | 10:00 | Euro-Zone Construction Output s.a. (MoM) (OCT) | -2.1% | Output fell for a third month in Sept on declines in Spain and France. | |
| EUR | 10:00 | Euro-Zone Constr. Output w.d.a. (YoY) (OCT) | -8.1% | ||
| EUR | 10:00 | Euro-Zone Trade Balance s.a. (euros) (OCT) | 2.4B | European exports rose for a second month in Sept. | |
| EUR | 10:00 | Euro-Zone Trade Balance (euros) (OCT) | 2.5B | 2.9B | |
| USD | 15:00 | Leading Indicators (NOV) | 1.1% | 0.5% | Likely rose for third month. |
| NZD | 22:30 | Performance Services Index (NOV) | 52.0 | Declined in October. | |
| Currency | GMT | Upcoming Events & Speeches | |||
| EUR | 8:45 | ECB's Axel Weber Speaks on Capital Markets, Macroeconomics | |||
| CHF | 10:30 | KOF Institute Economic Forecast (DEC) |
SUPPORT AND RESISTANCE LEVELS
CLASSIC SUPPORT AND RESISTANCE
| Currency | EUR/USD | GBP/USD | USD/JPY | USD/CHF | USD/CAD | AUD/USD | NZD/USD | EUR/JPY | GBP/JPY |
| Resist 2 | 1.3840 | 1.6420 | 89.00 | 1.0460 | 1.0922 | 1.0600 | 0.8230 | 127.60 | 146.05 |
| Resist 1 | 1.3700 | 1.5910 | 86.00 | 1.0000 | 1.0750 | 1.0200 | 0.8000 | 120.00 | 140.00 |
| Spot | 1.3242 | 1.5633 | 84.02 | 0.9647 | 1.0062 | 0.9901 | 0.7405 | 111.26 | 131.36 |
| Support 1 | 1.3000 | 1.5500 | 80.00 | 0.9500 | 0.9950 | 0.9600 | 0.6850 | 103.80 | 125.00 |
| Support 2 | 1.2925 | 1.5300 | 75.00 | 0.9000 | 0.9700 | 0.9375 | 0.6585 | 100.00 | 119.00 |
INTRA-DAY PIVOT POINTS
| Currency | EUR/USD | GBP/USD | USD/JPY | USD/CHF | USD/CAD | AUD/USD | NZD/USD | EUR/JPY | GBP/JPY |
| Resist. 2 | 1.3315 | 1.5700 | 84.63 | 0.9766 | 1.0100 | 0.9956 | 0.7448 | 111.87 | 132.07 |
| Resist. 1 | 1.3278 | 1.5666 | 84.32 | 0.9706 | 1.0081 | 0.9928 | 0.7427 | 111.57 | 131.72 |
| Pivot | 1.3230 | 1.5604 | 84.15 | 0.9675 | 1.0057 | 0.9880 | 0.7385 | 111.32 | 131.29 |
| Support 1 | 1.3193 | 1.5570 | 83.84 | 0.9615 | 1.0038 | 0.9852 | 0.7364 | 111.02 | 130.94 |
| Support 2 | 1.3145 | 1.5508 | 83.67 | 0.9584 | 1.0014 | 0.9804 | 0.7322 | 110.77 | 130.51 |
CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETSSCANDIES CURRENCIES
| Currency | USD/MXN | USD/TRY | USD/ZAR | USD/HKD | USD/SGD | Currency | USD/SEK | USD/DKK | USD/NOK | |
| Resist 2 | 14.4500 | 1.6755 | 8.7915 | 7.8165 | 1.4945 | Resist 2 | 7.7500 | 5.7800 | 6.2750 | |
| Resist 1 | 13.8500 | 1.5362 | 8.3675 | 7.8075 | 1.4655 | Resist 1 | 7.5800 | 5.6625 | 6.1150 | |
| Spot | 12.4125 | 1.5227 | 6.8378 | 7.7770 | 1.3137 | Spot | 6.8052 | 5.6253 | 5.9501 | |
| Support 1 | 12.0500 | 1.3665 | 6.6950 | 7.7490 | 1.2750 | Support 1 | 6.4500 | 5.2625 | 5.7030 | |
| Support 2 | 11.7200 | 1.3475 | 6.4300 | 7.7450 | 1.2500 | Support 2 | 6.1250 | 5.1000 | 5.5200 |
INTRA-DAY PROBABILITY BANDS
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| Currency | EUR/USD | GBP/USD | USD/JPY | USD/CHF | USD/CAD | AUD/USD | NZD/USD | EUR/JPY | GBP/JPY |
| Resist. 3 | 1.3439 | 1.5809 | 85.04 | 0.9772 | 1.0169 | 1.0043 | 0.7513 | 112.87 | 133.16 |
| Resist. 2 | 1.3390 | 1.5765 | 84.79 | 0.9741 | 1.0142 | 1.0008 | 0.7486 | 112.47 | 132.71 |
| Resist. 1 | 1.3340 | 1.5721 | 84.53 | 0.9710 | 1.0116 | 0.9972 | 0.7459 | 112.06 | 132.26 |
| Spot | 1.3242 | 1.5633 | 84.02 | 0.9647 | 1.0062 | 0.9901 | 0.7405 | 111.26 | 131.36 |
| Support 1 | 1.3144 | 1.5545 | 83.51 | 0.9584 | 1.0008 | 0.9830 | 0.7351 | 110.46 | 130.46 |
| Support 2 | 1.3094 | 1.5501 | 83.25 | 0.9553 | 0.9982 | 0.9794 | 0.7324 | 110.05 | 130.01 |
| Support 3 | 1.3045 | 1.5457 | 83.00 | 0.9522 | 0.9955 | 0.9759 | 0.7297 | 109.65 | 129.56 |
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