• Dollar Rallies Against All Major Currencies, Advance to Resume Into Next Week’s Trade
  • Euro Under Pressure as Fears Surrounding Europe’s Debt Contagion Lingers
  • British Pound Price Action To Be Dictated by Market Sentiment

Dollar Rallies Against All Major Currencies, Advance To Resume Into Next Week’s Trade

The U.S. dollar rallied against all of its counterparts during Friday’s trade as market participants continue to seek safety amid uncertainty in the global markets. In Asia, China warned against military acts near its coastline ahead of U.S. South Korean naval exercises that may lead the region toward war. According to Reuters, the U.S. plans to send an aircraft group led by nuclear-powered USS George Washington for military exercises with South Korea on Sunday. This announcement comes on the back of the death of four people on Tuesday amid North Korean Artillery shells. Thus, the greenback could push higher in the case of North Korea taking extreme actions. At the same time, contagion fears in the Euro-Zone could add additional momentum to the buck.

Meanwhile, the dollar index reached its highest level since September 21st, and now looks poised to continue its northern journey as price action recently broke above its descending channel dating back to June. The index is currently testing the38.2 percent Fibonacci retracement level on the June 7th to November 4th downswing. Next week’s scheduled event risks may serve to be the catalyst needed for the greenback to push higher. USD traders will be faced with the consumer confidence report, ISM manufacturing, and Nonfarm payrolls. The latter is of particular importance due to the fact that the labor force in the U.S. remains at depressed levels and was a key driver behind the Fed’s recent announcement of additional asset purchases.

Related:Discuss the Dollar in the DailyFX Forum, Currency Markets to Turn Choppy on Thin Speculative Liquidity

Euro Under Pressure as Fears Surrounding Europe’s Debt Contagion Lingers

The euro remains under pressure as currency traders fear that elevated debt levels will spread throughout the Euro-Zone like Ebola. Market participants will place Portugal in the spotlight as the region struggles to meet its fiscal deficit. In the coming months, the European Commission will release the budget/shortfalls for members in the bloc. In turn, traders are placing added weight onto the euro amid speculation that the report will be released worst than expected. Meanwhile, Spain is forecasted to meet its targets. However, unemployment remains at elevated levels and will likely weigh on economic activity in the near term. All in all, the outlook for the Euro-Zone is blurry as governments plan to implement tough austerity measures in order to battle their high budget debts, and so long as debt contagion fears remain, the euro will likely face further losses.

British Pound Price Action To Be Dictated by Market Sentiment

The British pound pushed 1.08 percent lower against the U.S. dollar to end the week as risk aversion regained its footing. Indeed, the currency looks poised to continue its southern journey as technical indicators point to additional downside risks. The Bank of England is in a sticky situation due to the fact that the split among MPC members will likely widen in the coming months as policy makers access the outlook for growth. Indeed, there is a 3 way split among members, but it noteworthy that further purchases by the central bank could cause near-term inflation to push higher and lead corporate borrowers to releverage. As a result, policy makers may wait until the spending cuts to take place in 2011 in order to access its affects on the economy. All in all, the British pound may witness a lackluster performance during the month of December as the central bank takes a wait and see approached with regards to the effect of spending cuts on growth heading until 2011. Investor sentiment will likely dictate price action during next week’s trade as the economic docket in Great Britain is fairly muted.

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ECONOMIC DATA

Next 24 Hours

Currency

GMT

Release

Survey

Previous

Comments

NZD

21:45

Trade Balance (New Zealand dollars) (OCT)

-400M

-532M

New Zealand’s trade deficit widened in September as imports rose faster than exports amid increased purchases of cars and machinery.

NZD

21:45

Balance (YTD) (New Zealand dollars) (OCT)

979.5

921

NZD

21:45

Exports (New Zealand dollars) (OCT)

3.31B

3.16B

NZD

21:45

Imports (New Zealand dollars) (OCT)

3.78B

3.69B

JPY

23:50

Retail Trade s.a. (MoM) (OCT)

-0.7%

-2.8%

Retail trade declined in September for the first time in four months.

JPY

23:50

Retail Trade (YoY) (OCT)

0.7%

1.4%

JPY

23:50

Large Retailers’ Sales (OCT)

0.1%

-1.7%

Fell YoY in every month since 2008.

AUD

0:00

HIA New Home Sales (MoM) (OCT)

0.6%

September rise was first since April.

GBP

0:01

Hometrack Housing Survey (MoM) (NOV)

-0.9%

U.K. home prices fell in October by the most since January 2009.

GBP

0:01

Hometrack Housing Survey (YoY) (NOV)

-0.1%

AUD

0:30

Company Operating Profit (QoQ) (3Q)

4.0%

18.9%

Profits surged in 3Q, led by miners.

AUD

0:30

Inventories (3Q)

0.4%

-0.5%

Dipped in 3Q for first time since ’09.

NZD

2:00

NBNZ Activity Outlook (NOV)

30.5

NZ business confidence rose last month to highest level since July.

NZD

2:00

NBNZ Business Confidence (NOV)

23.7

NZD

2:00

Money Supply M3 (YoY) (OCT)

-2.0%

Declined YoY in last eleven months.

JPY

5:00

Small Business Confidence (NOV)

46.4

Sits at lowest level since March.

EUR

9:00

Italian Producer Price Index (MoM) (OCT)

0.2%

0.2%

Producer prices increased 0.2% last month for a third time in 4 months.

EUR

9:00

Italian Producer Price Index (YoY) (OCT)

4.2%

4.1%

GBP

9:30

Mortgage Approvals (OCT)

47.0K

47.5K

U.K. lenders approved more mortgages than forecast in September.

GBP

9:30

Net Consumer Credit (OCT)

0.2B

0.3B

GBP

9:30

Net Lending Sec. on Dwellings (OCT)

0.5B

0.1B

GBP

9:30

M4 Money Supply (MoM) (OCT F)

-0.2%

M4 money supply growth fell to 0.3% in the three months through September from 4.1% prior.

GBP

9:30

M4 Money Supply (YoY) (OCT F)

1.0%

GBP

9:30

M4 Money Supply ex OFCs (Annualised) (3M) (OCT)

0.3%

EUR

10:00

Euro-Zone Economic Confidence (NOV)

105

104.1

European confidence in the economic outlook improved more than forecast to the highest in almost three years in October, led by manufacturing sentiment.

EUR

10:00

Euro-Zone Consumer Confidence (NOV F)

-10

-10

EUR

10:00

Euro-Zone Business Climate Indicator (NOV)

1.05

0.98

EUR

10:00

Euro-Zone Industrial Confidence (NOV)

2

0

EUR

10:00

Euro-Zone Services Confidence (NOV)

9

8

EUR

10:00

Italian Hourly Wages (MoM) (OCT)

0.2%

0.3%

Italian hourly wags rose 0.3% in September, the most in 5 months.

EUR

10:00

Italian Hourly Wages (YoY) (OCT)

2.2%

1.7%

CAD

13:30

Current Account (BoP) (Canadian dollar) (3Q)

-$15.2B

-$11.0B

Widened in 2Q on lower exports.

CAD

13:30

Industrial Product Price (MoM) (OCT)

0.2%

0.2%

Industrial product prices rose for a second month in September.

CAD

13:30

Raw Materials Price Index (MoM) (OCT)

0.8%

-0.4%

USD

15:30

Dallas Fed Manufacturing Activity (NOV)

3

2.6

Rose on increased production.

NZD

21:45

Building Permits (MoM) (OCT)

1.4%

0.5%

Permits rose in 3 of last 4 months.

Currency

GMT

Upcoming Events & Speeches

JPY

0:30

BoJ’s Kiyohiko Nishimura to Speak on Financial System

JPY

1:00

BoJ Governor Masaaki Shirakawa Speaks on Japanese Economy

EUR

10:45

European Commission Releases Economic Growth Forecasts

USD

18:30

Fed’s James Bullard Speaks on Consumer Protection

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE – 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist. 2

1.3840

1.6715

89.00

1.0460

1.0922

1.0600

0.8230

127.60

146.05

Resist. 1

1.3700

1.6420

86.00

1.0000

1.0750

1.0200

0.8000

120.00

140.00

Spot

1.3233

1.5606

84.08

1.0020

1.0199

0.9643

0.7503

111.26

131.23

Support 1

1.3335

1.5650

80.00

0.9500

0.9950

0.9640

0.6850

103.80

125.00

Support 2

1.2925

1.5500

75.00

0.9000

0.9700

0.9375

0.6585

100.00

119.00

CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

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

1.4865

8.3675

7.8075

1.4655

Resist. 1

7.5800

5.5400

6.1150

Spot

12.4877

1.4902

7.1270

7.7649

1.3192

Spot

7.0026

5.6328

6.1643

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 PIVOT POINTS 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist. 2

1.3428

1.5839

84.57

1.0089

1.0339

0.9896

0.7678

112.49

132.58

Resist. 1

1.3330

1.5723

84.32

1.0054

1.0269

0.9770

0.7591

111.87

131.91

Pivot

1.3266

1.5656

83.95

1.0020

1.0177

0.9691

0.7535

111.22

131.44

Support 1

1.3168

1.5540

83.70

0.9985

1.0107

0.9565

0.7448

110.60

130.77

Support 2

1.3104

1.5473

83.33

0.9951

1.0015

0.9486

0.7392

109.95

130.30

INTRA-DAY PROBABILITY BANDS 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

EUR/GBP

Resist. 3

1.3433

1.5792

85.05

1.0154

1.0319

0.9793

0.7621

112.97

133.25

0.8570

Resist. 2

1.3383

1.5746

84.81

1.0121

1.0289

0.9756

0.7592

112.55

132.74

0.8547

Resist. 1

1.3333

1.5699

84.57

1.0087

1.0259

0.9718

0.7562

112.12

132.24

0.8524

Spot

1.3233

1.5606

84.08

1.0020

1.0199

0.9643

0.7503

111.26

131.23

0.8478

Support 1

1.3133

1.5513

83.59

0.9953

1.0139

0.9568

0.7444

110.40

130.22

0.8433

Support 2

1.3083

1.5466

83.35

0.9919

1.0109

0.9530

0.7414

109.97

129.72

0.8410

Support 3

1.3033

1.5420

83.11

0.9886

1.0079

0.9493

0.7385

109.55

129.21

0.8387

Written by: Michael Wright, Currency Strategist for DailyFX.com

To receive Michael’s reports via email or to submit Questions or Comments about an article; email mwright@fxcm.com

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