The U.S. Dollar finished lower today against a basket of trade weighted currencies. The Greenback was under pressure all day and never quite recovered following an overnight announcement that Dubai received $10 billion in financing from Abu Dhabi to pay part of the debt held by the state-owned Dubai World.

Global investor concerns were eased by this event because it helped to alleviate the need to use the Dollar as a safe haven investment. Last week, the Dollar rose partly after a credit ratings downgrade of Dubai owned entities along with downgrades of Greece, Portugal and Spain.  
Trading was lackluster and slow ahead of this week’s Federal Reserve Open Market Committee meeting on December 10th.  Investors seemed reluctant to take a big position ahead of this last meeting for the year. Since the FOMC’s last meeting in November, the U.S. unemployment rate has dropped to 10% and retail sales have risen above expectations. Job losses and consumer spending are two key input factors the Fed uses to determine its interest rate policy.

Traders are hoping that the Fed looks at the improvement in these two factors and issues a more hawkish statement.  A dovish statement will be a surprise which is not likely to bode well for the Dollar.

The EUR USD finished slightly higher after bouncing off a 50% price at 1.4594 Sunday night.  The initial thrust in this market overnight was provided by the surprise news out of Abu Dhabi regarding its partial bailout of Dubai World.  Gains were muted, however, by the news that Euro Zone industrial production fell for the 18th month while employment extended its decline and uncertainty over the Fed’s next decision.

The GBP USD rebounded after trading lower overnight. The news out of Dubai did not help the British Pound.  The lack of follow-through to the downside after the New York open most likely led to short-covering.  British Pound traders have enough on their plates than to worry about sovereign debt issues in the Middle East.  The U.K. has budget and debt issues of its own.  

The USD JPY was under pressure all day from traders reversing their long positions initiated last week. This currency pair closed on a 50% price at 88.57. The chart indicates the possibility of a further pull-back into the 50% support at 87.80.

The USD CHF finished slightly lower in light trading.  Resistance was provided by last week’s high at 1.0367. Weakness was indicated by this pair’s failure to hold the old main top at 1.0337.  This is usually a sign that conditions are overbought and that the last drive higher was most likely stop driven rather than fresh buying.  

Firm crude oil and stronger equity markets helped to pressure the USD CAD late in the trading session.  This market continues to drift inside of a tight and narrow range without much direction.  Unless something major comes out that will ignite some movement, look for trading to continue on both sides of 1.0598 and 1.0537.

Demand for higher yielding assets helped boost the AUD USD and NZD USD after early weakness.  The news out of Dubai helped to alleviate fears about holding higher risk assets.

The NZD USD was under pressure when New York opened but turned around about mid-morning. This could be a sign that traders are ready to resume the strong up move triggered by last week’s surprise hawkish statement by the Reserve Bank of New Zealand.

Contact Us:
Local: 312-896-3930
Toll Free: 800-971-2440

DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.