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USD

Yesterday, U.S. stocks fell, erasing gains that were made since the Fed's Sept. 18th interest-rate cut, which accelerated a sell-off in the U.S. currency. The dollar slid even further after comments from senior Chinese officials stirred concerns about China's central bank shifting reserves away from the U.S. currency. As a result, the USD has been dragged down to its lowest point in 30 years against a basket of six rivals yesterday.

Meanwhile, the recession of the housing sector is progressing. Following the downdraft from the housing industry spreading to other sectors, traders increased wagers that the Fed will lower its benchmark interest rate to 4.25% by the end of the year. Futures contracts show that the odds of a 0.25% point rate cut at the central bank's Dec. 11 policy meeting are currently standing at 70%. There are also a lot of concerns about the health of the U.S. economy in general and the greenback seems to be losing its status as the major global currency.

Today the most significant news coming out of the US will be the Unemployment Claims. The figure is expected to be released at 320K, slightly better last month's mark of 281K. Later, at 15:00 GMT, Fed Chairman Bernanke is scheduled to speak about the economic outlook during his testimony in Washington DC. Bernanke is known for dropping clues during his speeches, as it is the FOMC's tenet to keep the public aware of their monetary policy before interest rates are changed. Heavy market volatility is often experienced during Bernanke's speeches.

Recent price action in the EUR\USD suggests that the aggrandizement of the currency pair may not stop at least until the 1.50 level is breached. According to our internal data, positioning has not reached extremes, as traders continue to fade the move.

EUR

The EUR surged vs. the USD, on track for its biggest one-day percentage gain this year, sending European stocks down nearly 1%. The European currency hiked after Chinese officials suggested that their country should look to diversify its 1.4 trillion dollar currency reserves into stronger currencies and explicitly mentioned EUR, which sent the single currency flying to fresh record highs. Yesterday, the EUR raced to an all-time high of $1.4730, before retreating to $1.4627 in the late evening, still up 0.7% on the day.

It's likely that the EUR will reach 1.50 against the USD, but whether or not this will happen soon will be dependent upon ECB President's Trichet comments at today's news conference regarding the interest rate statement. The European Central Bank has kept a 4% overnight lending rate for the last four policy meetings. The ECB is expected to announce today, that it will keep interest rates unchanged. The central bank's statement and the news conference, in which President Jean Claude Trichet will offer up the monetary policy's outlook on growth and inflation, could trigger a strong move from the high flying EUR. Failure from Trichet to show any displeasure with the EUR rally at today's press conference will most likely trigger a move to $1.50 per Euro.

JPY

For the past two weeks, the JPY had been trading in a range, but yesterday broke downward, closing in on a two month low. A sharp rise in risk aversion only exacerbated the greenback's downfall against the JPY, with the USD losing a substantial 200 pips to lows of 112.66 JPY. Growing uncertainty on the global economy, which faces rising losses from the credit crisis, was fed by higher oil prices, encouraging investors to unwind carry trades funded in JPY, thus boosting the Japanese currency.

The impact of the high JPY is a substantial worry for the Japanese economy and if Crude Oil does rise as expected toward the $100/barrel level, this will lead to rising gas prices and start to really have an impact on the already dampening Japanese domestic demand.

Today, Japan's economic calendar gives us the release of Machine Tool Orders and the Eco Watchers Survey; neither of which should be particularly significant in moving the market. The JPY may push further upwards against the USD today following Fed Chairman's Bernanke speech.

Technical Analysis

EUR/USD

After the touch at the all time high of 1.4735, the pair now consolidates at 1.4630 and appears to be heading to 1.4600. The momentum is very bullish on all fronts, especially on the 4 Hour chart, where we see a bullish cross forming, which will probably take the pair higher, back to the 1.4700 level.

GBP/USD

The cable is in the midst of a very strong uptrend which peaked at 2.1060 yesterday. The hourly charts are showing that a certain correction is imminent, while the daily charts are showing an intensive bullish sentiment. It looks as if the 2.0900 level might be reached before the cable breaks an additional record level.

USD/JPY

The ongoing wide range the pair has been going through in the past two months has been violently breached. The USD/JPY is steadily heading to 112.00 which is a key support level. A breach through the key level will validate a much deeper downtrend that might end at 111.00 on a weekly perspective.

USD/CHF

The 1.1250 level failed to be breached yesterday, and was marked as a very strong support for the pair. The 4 hour chart is indicating a strong bearish momentum and dailies support the notion that we might see 1.2175 today. Looking for a good short entry point appears to be preferable today.

Wild Card

Crude Oil

The uptrend the Oil is going through at the moment is probably the strongest trend in world markets today and has massive implications on world wide economy. Forex traders have a fantastic opportunity to join a trend which is supported by much more than the technical indications we see in the hourly and the daily charts. A great entry point might be available at the moment as the pair now floats around the bottom section of the 4 hour channel and might be a great entry point for Oil's journey into the 100$ zone.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4735	2.1080	113.65	1.1435	0.9325	0.7050
	1.4716	2.1059	113.30	1.1400	0.9300	0.7027
	1.4692	2.1036	113.00	1.1360	0.9260	0.7000
Support	1.4643	2.0999	112.45	1.1300	0.9200	0.6951
	1.4615	2.0967	112.00	1.1275	0.9170	0.6923
	1.4590	2.0940	111.80	1.1240	0.9140	0.6901

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-11-08	00:30	AUD	Employment Change		13.0K	21.0K
		Employment Change Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises
2007-11-08	00:30	AUD	Unemployment Rate		4.2%	4.2%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2007-11-08	06:00	USD	Machine Tool Orders	y/y	16.3%	-
		Machine Tool Orders Measures the total value of new orders placed with machine tool manufacturers. A rising trend has a positive effect on the nation's currency. When manufacturers increase their purchasing of machine tools it signals that the manufacturing industry is in an expansion phase.
2007-11-08	06:45	CHF	Unemployment Rate		2.6%	2.6%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2007-11-08	07:00	EUR	German Trade Balance		14.1B	15.0B
		German Trade Balance Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
2007-11-08	07:00	JPY	Eco Watchers Survey		42.9	-
		Eco Watchers Survey Measures the mood of businesses that directly service consumers, such as barbers, taxi drivers, and waiters. A reading above 50 signals an improvement in sentiment.
2007-11-08	07:45	EUR	French Government Budget Balance		-63.2B	-
		French Government Budget Balance Measures the difference between the central government's monthly income and spending. A positive number indicates more revenue was received than spent during the month.
2007-11-08	12:00	GBP	Interest Rate Statement		5.75%	5.75%
		Interest Rate Statement The Central Bank Governing Council releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the countries short term interest rate ("minimum bid rate"). A rising trend has a positive effect on the nation's currency. Short term interest rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. What makes interest rates so important is that high rates attract foreigners looking for the best "risk-free" return on their money, which significantly increases demand for the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. This is what makes inflation-predicting indicators so important. Traders know that rising prices will lead the central bank to raise interest rates, which ultimately leads to a more valuable currency.
2007-11-08	12:45	EUR	Interest Rate Announcement		4.00%	4.00%
		Interest Rate Announcement Each month the Bank of Japan (BOJ) Monetary Policy Committee (MPC) votes on where to set the nation's short term interest rate (i.e., "overnight call rate"). Shortly after each vote, the MPC releases a statement that contains the outcome of their vote. While no commentary is provided, a press conference regarding the economic conditions that effected their decision is held a few hours afterward. A rising trend in interest rates has a positive effect on the nation's currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down.
2007-11-08	13:15	CAD	Housing Starts		281K	230K
		Housing Starts NULL
2007-11-08	13:30	USD	Unemployment Claims		327K	320K
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2007-11-08	13:30	CAD	Unemployment Claims	m/m	0.4%	0.4%
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2007-11-08	13:30	EUR	ECB President Trichet Speaks		-	-
		ECB President Trichet Speaks NULL
2007-11-08	15:00	USD	Fed Chairman Bernanke Speaks		-	-
		Fed Chairman Bernanke Speaks Federal Reserve Chairman Ben Bernanke will deliver a speech titled "John Taylor's Contributions to Economics" at a conference in Dallas. As head of the Federal Open Market Committee (FOMC), which is responsible for setting the nation's short term interest rate, Ben Bernanke is arguably the most influential figure in the currency markets. Bernanke is known to drop clues during his speeches, as it is the FOMC's tenet to keep the public aware of their monetary policy long before interest rates are changes. Heavy market volatility is often experienced during Bernanke's speeches as traders attempt to decipher his clues.