Dollar versus EUR and GBP
I was reading an article on Bloomberg this morning after the payroll data and although the news item took a positive slant, I think the most important factor mentioned was “The (US) economy is slowing down in the forth quarter but not so rapidly that you’re going to have a big down-draft in consumer spending”. So is it saying; things are bad, just not really bad? I think Kathy Lien’s article on Daily FX posted just shortly after the announcement is closer to the mark in regards to how currency traders are seeing the news. She had written an article the previous day about how a very strong number would be needed to bolster the fragile current Dollar recovery. So although the numbers were better than expected they don’t seem to be enough to give the Dollar what it needs for an accelerated recovery.

What’s next?
All focus now shifts to next week’s FOMC interest rate decision. There has been talk of as much as a ½ point reduction however with reasonable Employment data a ¼ is now just as possible. So the thing to watch going into the announcement is what the street will be expecting. If sentiment is for ¼ point and this is what we get then we may not see much reaction and a slight strengthening of the Dollar may occur. However on the other hand if the street expects a ¼ point and we get ½ then we will likely see resumption of the strong upward trend and a return to the 1.50 area on the EUR. The key here is to try and stay attuned to what the expectation is. The GBP/USD is at a precarious point on the up-trend line so keep an eye on an attempt at that level. (See chart)

The Carry-Trade watch
So far we are still in limbo waiting to see if the critical levels are going to be revisited. At this time it looks like more correction to the upside is due before any new attempts at the lower levels. Let’s a keep a vigil here.

The CAD back at a Buck even
The CAD made a great run back to parity coming within 5 Pips of par again friday morning. I think another visit to the other side for a short while is in the making. The Canadian Government has been jawboning (making positioning statements without action) but has yet to take any real action towards reducing the value of its currency. As long as traders continue to view the USD as soft and resources remain strong (Oil , Gold Etc), we should expect continued play at the “Par” level. 

Have a great week in trading,

Pierre Charlebois

TECHNICAL OUTLOOK – DAILY CHARTS

EURUSD
Resistance:1.4785
Support:1.4490
Sentiment:Mixed

GBPUSD
Resistance:2.505
Support:2.0140
Sentiment:Mixed To Bearish

USDJPY
Resistance:112.90
Support:109.50
Sentiment:Bullish

USDCHF
Resistance:1.1460
Support:1.1160
Sentiment:Mildly Bullish

USDCAD
Resistance:1.0340
Support:0.9835
Sentiment:Still Bullish

AUDUSD
Resistance:0.8925
Support:0.9655
Sentiment:Mildly Bullish

GBPJPY
Resistance:231.10
Support:222.40
Sentiment:Mildly Bullish