ECB Interest Rate Meeting in Focus

ECB Interest Rate Meeting in Focus

U.S. Dollar Trading (USD) a relatively quiet day on the markets with small gains in US stocks keeping a nascent Dollar rally in check throughout the New York session. USD/JPY was the exception leading Yen crosses higher in another day of heavy Yen selling. EUR/USD eased slightly ahead of the ECB meeting tonight which could see Dovish comments or even a rate cut. Looking ahead, FOMC Member George and Bullard Speak. Also Weekly Jobless Claims forecast at 361k vs. 372k previously.

The Euro (EUR) fell to day lows at the start of the US session but we found support at 1.3035 before rebounding back to 1.3080. The daily trading range in compressing and we are preparing for fresh direction later tonight with guidance from the ECB. EUR/JPY is back at Y115 after solid support yesterday in Asia.

The Sterling (GBP) is under heavy selling pressure lately as trader’s price in more easing form the BOE in 2013. The BOE meet tonight and are unlikely to move on rates or the size of their Asset purchase program at this meeting. Support was found at 1.6000 overnight but the rebound has been weak so far. Looking ahead, ECB Rate meeting forecast to hold at 0.75%. BOE Rate meeting forecast to hold at 0.5%.

The Japanese Yen (JPY) USD/JPY began its move in Asia rising from Y86.80 to Y88.00 be the end of the trading day with Japanese official ramping up the rhetoric on plans to increase fiscal spending. All the Yen crosses enjoyed gains on the back of the major and we are now waiting for more details on the stimulus plans leaked over the last few trading days.

Australian Dollar (AUD) the AUD/USD is remaining locked in its recent trading range around the 1.0500 level. November Retail Sales fell -0.1% vs. 0.3% forecast and did dampen sentiment briefly in the Asian session. Relentless AUD/JPY support and strong US stocks are helping to support. Looking ahead, December Trade Balance forecast at 20.1bn vs. 19.6bn previously.

Oil & Gold (XAU) Gold briefly broke above resistance at $1660 but there was little follow through and we eased back to $1655 in the US session. The outlook is mixed with FOMC speakers later today hopefully casting further light on last week’s FOMC minutes. Oil settled down overnight finding resistance at $93.50 before testing support under $93 and closing at the figure.