Investment in Citigroup seen as market positive. Markets rally on the news

U.S. Dollar Trading (USD) was generally firmer against major currencies as the Abu Dhabi Investment Authority announced they will buy a stake in Citigroup for US$7.5billion. This prompted a rebound in equity markets and a resumption of the carry trade at the expense of the Japanese Yen and Swiss Franc in particular. In U.S. share markets the NASDAQ was up by 39 points (+1.5%) whilst the Dow Jones recovered by 215 points (+1.7%). Crude oil gave up more gains as a fall in demand is expected from a US economic slowdown. Crude oil fell by US$2.56 a barrel to US$95.14. Looking ahead, Durable good orders, existing home sales and the Beige book are all due for release today. Fed’s Fisher is also due to speak on the economy.   

The Euro (EUR) was slightly weaker against the greenback despite a better than expected IFO reading. IFO index came in at 104.2 compared to a 103.3 estimate for the month of November. Overall the EURUSD traded with a low of 1.4810 and a high of 1.4908 before closing the day at 1.4845.

The Japanese Yen (JPY) was hampered by news of the Abu Dhabi investment as the markets re-established carry trades selling the low yielding Yen and buying high yielding currencies. Overall the USDJPY traded with a low of 107.28 and a high of 108.88 before closing the day at 108.68. Looking ahead, retail sales data is due out today. UPDATE: Retail sales y/y 0.8% beating estimates of 0.5% for the month of October.

The Sterling (GBP) was steady against the greenback as investors looked to policymakers and housing data later this week for clues on interest rate policy moves ahead of next week’s MPC meeting. Overall the GBPUSD traded with a low of 2.0643 and a high of 2.0757 before closing the session at 2.0698.

The Australian Dollar (AUD) initially rallied on the news of investment in Citigroup before giving up gains in the overnight session. The AUDUSD traded with a low of 0.8681 and a high of 0.8813 before closing the day at 0.8757. Looking ahead, CAPEX is due out tomorrow.

Gold (XAU) was weaker in light of a pullback in oil prices and a stronger US dollar. Gold fell by US$15.10 to US$811.40 an ounce.
 
TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4636	1.4776	1.4830	1.4968	1.5000
USD/JPY	106.98	107.23	108.90	109.17	109.98
GBP/USD	2.0457	2.0519	2.0670	2.0764	2.0846
AUD/USD	0.8606	0.8654	0.8765	0.8870	0.8954
XAU/USD	795.00	803.00	813.00	829.40	837.00

                                      
Euro – 1.4830
Initial support at 1.4776 (Nov 21 low) followed by 1.4636 (Nov 20 low). Initial resistance is now located at 1.4968 (Nov 23 trend high) followed by 1.5 (Psychological resistance).
 
Yen – 108.9
Initial support is located at 107.23 (Nov 26 low) followed by 106.98 (76.4% retracement of the 101.67 to 124.17 advance). Initial resistance is now at 109.17 (Nov 22 high) followed by 109.98 (Nov 21 high)
 
Pound – 2.0670
Initial support at 2.0519 (Nov 23 low) followed by 2.0457 (Nov 20 low). Initial resistance is now at 2.0764 (Nov 23 high) followed by 2.0846 (Nov 14 high)
 
Australian Dollar – 0.8765
Initial support a 0.8654 (Nov 21 low) followed by 0.8606 (Sep 21 low). Initial resistance is now at 0.887 (Nov 26 high) followed by 0.8954 (Nov 21 high)
 
Gold – 813
Initial support at 803.00 (Nov 23 low) followed by 795.00 (Nov 23 low). Initial resistance is now at 829.4 (Nov 27 high) followed by 837.0 (November 26 high)