The Dollar was supported Monday in holiday markets by continued stalling in the US fiscal cliff saga. The looming January 1st deadline will keep the fiscal cliff in focus over the next few days and could lead to risk off selling if no deal is made. The Yen was the weakest currency in the markets with USD/JPY breaking above Y85 and holding onto these gains overnight. Looking ahead, Weekly Jobless Claims forecast at 360k vs. 361k previously. November New Home Sales forecast at 0.37m vs. 0.36m previously.
The Euro (EUR)
The EUR/USD was well supported on a dip below 1.3200 and buyers took back control later in the US session with EUR/JPY buying pushing the Yen cross above Y113. All the Euro crosses did well with EUR/GBP briefly above 0.8200 and EUR/AUD moved towards 1.2780. The Sterling (GBP) was weak with a small Cable rally being sold into as EUR/GBP buying weighs on the major. London was closed for holidays so traders will be waiting for Thursday to get a real feel for GBP/USD’s strength. Also ahead, November Mortgage Approvals forecast at 34.6k vs. 33k previously.
The Japanese Yen (JPY) USD/JPY extended gains dramatically post xmas with the market gapping above Y85 and pushing to Y85.60. All the Yen crosses are in solid uptrends and traders will be closely watching any comments from the PM Abe and new finance minister Aso. Australian Dollar (AUD) the AUD/USD has been heavy selling pressure over the last 2 trading days breaking under 1.0500 on Friday and then 1.0400 during holiday trading so far this week. The usual AUD buyers have been missing over the last few sessions and we could be in for more selling if key supports are broken at 1.0295 (200 day moving average).
Oil and Gold (XAU) Gold managed a small relief rally after putting in a technical double bottom near $1636 last week. Resistance was found at $1666. Oil has been surging higher on hopes Japanese stimulus will flow into Oil demand. OIL/USD broke above $90 and we closed at $91 by the end of US the session.
Pairs To watchEUR/USD Fiscal Cliff to Hamper Rally?
USD/JPY Above Y85 how far will uptrend go? Y90?