Dollar posted new record lows vs majors in thin Forex market

The Euro set a record high against the Dollar on Friday at 1.4967; the key 1.5000 level remained out of reach and the EurUsd fell back more than a cent, at 1.4839, on comments from a Euro zone policy-maker. European Central Bank Governing Council member Miguel Angel Fernandez Ordonez said he saw a greater-than-expected economic slowdown in the Euro zone and there was not enough data to dispel uncertainty about the effects of financial market turmoil. End of last week, moves in currencies were exacerbated by thin liquidity following the Thanksgiving holiday in the United States on Thursday and a Japanese market holiday on Friday. The Yen and the Swiss franc have both benefited in recent sessions as investors, worried about the fallout from credit market problems and the impact on the broader economy, remained averse to risk. Worries about the fallout have been stoked by the OECD.

News and Events:
The Euro set a record high against the Dollar on Friday at 1.4967; the key 1.5000 level remained out of reach and the EurUsd fell back more than a cent, at 1.4839, on comments from a Euro zone policy-maker. European Central Bank Governing Council member Miguel Angel Fernandez Ordonez said he saw a greater-than-expected economic slowdown in the Euro zone and there was not enough data to dispel uncertainty about the effects of financial market turmoil. Ordonez’s comments reminded investors that the fallout from the credit crisis is not limited to the United States, where the fallout has prompted 75 basis points worth of cuts in the fed funds rate since September and helped send the Dollar to record lows. Ordonez’s comments gave some respite to the Dollar, which slid to record lows versus the Euro, the Swiss franc and other major currencies on Friday, as investors bet that the Federal Reserve will cut rates by at least another 25 basis points at its next meeting on December 11. End of last week, moves in currencies were exacerbated by thin liquidity following the Thanksgiving holiday in the United States on Thursday and a Japanese market holiday on Friday. In Friday�s trading, EurUsd was nearly unchanged at 1.4838 and well below the peak of 1.4967 set earlier in the session. The sell-off in the EurUsd helped drag the UsdJpy up from 107.54, 2-1/2 year low, but trading around 108.30 at close the Dollar is still down near 6% since the start of November, and on track for its biggest monthly percentage fall versus the Yen since March 2000. The Yen and the Swiss franc have both benefited in recent sessions as investors, worried about the fallout from credit market problems and the impact on the broader economy, remained averse to risk. Worries about the fallout have been stoked by the Organization for Economic Cooperation and Development (OECD), which warned in a report on Wednesday that overall losses caused by the US mortgage market crisis could conceivably hit $300 billion. The UsdJpy fell to a historic low of 1.0888 before rallying to trade up to 1.1022 +0.12%.

Today’s Key Issues (time in GMT):

08:30 DKK November Consumer Confidence 5 v 5.4

08:30 SEK October Trade Balance previously 8.2B

13:30 USD October National Activity Index previously -0.45

13:30 USD November UBS Gallup Optimism previously 70

The Risk Today:

EurUsd Euro remains in a positive trend. It set new record high on Friday at 1.4967. Two weeks ago, it found support on 1.4520 and is currently consolidating in between 1.4800 and 1.4850. On the downside, only a return below 1.4500 and further drop to 1.4280 former resistance would threaten the uptrend. This could open the way down toward 1.4000 nearby support and 1.4125 trendline support. Initial support holds 1.4800.

GbpUsd Following early November heavy drop, -1.73% 12 November, Cable found support last week around 2.0600. On the upside, 2.1161 high (Friday 9th) marks the strong resistance before putting 2.1355 May 11th 1981 into focus. Cable posted an intraday 2.0764 high Friday morning. Initial resistance holds 2.0844 Nov 14th high. On the downside, a strong return below 2.0525 may open a market reversal. But it would need renewed pressure below 2.0200 and further weakness toward 2.0000 psychological levels to validate a downtrend. Initial support holds 2.0525.

UsdJpy Trend remains bearish. UsdJpy mostly drop last week posting new lows. It hit 107.54, 2 �-year low, last Friday. On the downtrend, supports hold 106.50 June 2005 low and 101.68 January 2005 low. On the upside, market needs a return over 109 and 114 to undermine the actual downtrend. This may open the way toward 117.63 resistance. Initial resistance holds 109.13 former support.

UsdChf Downtrend remains heavy. It posted an extreme low 1.0888 on Friday morning, following recent break toward the 12-year low 1.1110 from April 1995. Market will again found support on 1.1000 key level. Initial resistance holds 1.1300 (12th Nov) high. It would also need a return over 1.1500 and 1.1640 level to relieve actual bear threat.

Resistance and Support:

By[B] Jean-Claude Braha [/B]- ACM Advanced Currency Markets, Geneva, Switzerland