The ultimate trade-off of the end of year allowed the euro to end up against the dollar, of a level upper to $ 1.33 dollar, the dollar fell broadly on Friday as investors closed their books on 2010.Indeed, within the traditional closing book operations at year-end, fund managers sold their dollars to fill their portfolios with more remunerative currencies. But the single currency was not the only one to benefit from this movement. The Australian dollar has risen on Thursday in front of US dollar to a post-float high since 1983. Because the dollar has a very low yield, the U.S. central bank’s key rate is still at a level close to zero for two years now. It also undertakes currently massive injections of liquidity to support the economy, which dilute the value of the dollars in circulation. Conversely, the Taiwanese authorities have raised their rates on Thursday for the third time of the year, as have already been done in 2010 by other countries as Canada, South Korea and Australia. This makes their currency assets more profitable.
Concerning the Eurozone, Portugal has once again assured to be “able to resolve its budgetary problems”, without making fall the borrowing rate of the country. The Greek 10-years bond yield rose to their highest historical on Friday. What moderate somewhat the enthusiasm surrounding the entry f a new country in the Eurozone. Actually, Estonia became the 17th country on Saturday to adopt the euro, despite a crisis in the currency club which is likely to mean bigger eastern European countries will put off euro zone entry for years. Proof of this climate of general mistrust, the Hevetian currency, which reached historic highs on Thursday against the euro and the pound, recorded on Friday a new high against the dollar, which fell to 0.9302 Swiss franc, a level never seen.
ECONOMIC CALENDAR 2010, JANUARY 15 (GMT Time)
EUR / USD
The spot rate broke through the resistance of its medium-term bullish channel at 1.3250 resulting in acceleration and seems to initiate a pull back on these levels before a resumption of bullish. However a break of these levels would entail a return to the lower limit of this channel to 1.3100.
According to previous events, the market indicates a bullish opportunity on the levels of 1.3250 with a 1st objective of 1.3350, then 1.3400. A break in 1.3220 would invalidate this scenario.
GBP / USD
The spot rate broke through the resistance of its medium-term downtrend channel at 1.5520 resulting in acceleration and seems to initiate a pull back on these levels before a resumption of bullish. A rebound in this area would achieve the upper limit of its channel to 1.5740.
According to previous events, the market indicates a bullish opportunity on the levels of 1.5520 with a 1st objective of 1.5620, then 1.5660. A break in 1.5590 would invalidate this scenario.
Gold is approaching the upper limit of its medium-term bullish channel to 1437, suggesting a decline in the short term. However a break of these levels would initiate a more violent upward trend.
According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 1437 with a 1st objective of 1447, then 1453. A break in 1435 would invalidate this scenario.
The spot rate moves between its intermediate support and the upper limit of the middle term bearish channel between 80.95 and 81.35. A rupture of the upper limit of this one would free a significant potential and begin an upward trend.
According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 81.35 with a 1st objective of 81.80, then 82.00. A break in 81.10 would invalidate this scenario.
Sophie J. Fletcher
Head of Research
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