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DOLLAR: It is not surprising to see the Dollar carving out fresh lows on the charts again this morning, as a number of international equity markets forged even more gains in the overnight action. Apparently currency traders and global equity traders simply discounted weak UK retail sales readings for August overnight, perhaps because the general consensus is entrenched in a global recovery view. We suspect that US data this morning will simply contribute to the downward track in the Dollar, with even more equity market gains in the US adding to the downside momentum in the Greenback. While other markets didn’t seem to fret over the prospect of a rising US budget deficit, off forward movement on US Health Care Reform, we suspect that the currency markets are set to assume that a move to expand US health care coverage to tens of millions of uninsured US workers, will ultimately balloon the US deficit. In short, the Dollar looks to see pressure off the macro economic outlook and also because of the prospect of even larger US budget deficits ahead. In order to reverse the bias in the Dollar, probably requires a major slide in the US equity markets.
EURO: The Euro remains well bid despite news overnight of a significant widening of its trade balance. As suggested early in the week, the upward bias in the Euro is not coming from the ebb and flow of economic performance in the Euro zone, the bullish bias in the Euro is coming from the firming prospects of a global recovery. It does seem as if the slack UK retail sales readings tripped up the euro temporarily this morning, but favorable US numbers later this morning should probably rekindle the upside bias in the Euro. Near term up trend channel resistance in the December Euro is seen at 147.90 today.
YEN: The Yen has generally respected a pattern of higher lows on the charts this week and that trend support is seen at 109.68 today, with a rise to the 109.93 level possible on Friday. Generally up beat views toward the Chinese economy and generally up beat expectations for the US economy today should leave the Yen in an upward motion on the charts. In the face of more US equity market gains and even better US numbers it is possible that the December Yen could touch 111.30 before the close this week.
SWISS: The trend in the Swiss looks really impressive but some players have begun to fret again over the prospect of intervention from the SNB, as they feel that a Swiss above 97.00 could hurt Swiss export activity. However, it is possible that the prospects of inflation are capable of offsetting the speculative selling interest in the Swiss off the threat of intervention. Critical up trend channel support in the December Swiss is seen at 96.68 today.
POUND: While the Pound has initially managed to discount the somewhat disappointing UK retail sales readings overnight, it seems that the Pound is still set to mostly draft off the persistent weakness in the US Dollar. Therefore, the Pound might be able to rise even further today, in the wake of the scheduled US data flows. Near term upside targeting in the December Pound today is 166.61.
CANADIAN DOLLAR: With another new high for the move overnight, the Canadian looks set to extend the upward push. In addition to feeding off a persistently weak US Dollar, the Canadian is also drafting off an upward bias in key Canadian commodities. In order to get to a technical resistance point in the Canadian requires a look at the weekly charts, with the market seemingly poised to forge a rise back above the 95.00 level.
TODAY’S MARKET IDEAS: More Dollar declines ahead, with the Canadian becoming the primary leadership currency.
