Poor existing home sales, durable goods orders, and a negative Beige Book all point to further interest rate cuts in the US

U.S. Dollar Trading (USD) was weaker against the majors barring CHF and JPY as sales of existing homes fell 1.2% to its lowest level since 1999. Durable goods orders fell for a third straight month, pulling back 0.4%. The Beige Book did not offer any respite for the battered greenback, noting downbeat retail spending and a quite depressed residential real estate all pointing to a slow down in US economic growth. In U.S. share markets, the NASDAQ was up by 82 points (+3.2%) whilst the Dow Jones shot up by 331 points (+2.6%) as markets welcomed rumours of further interest rate cuts in the US. Crude oil fell again by US$3.35 a barrel to US$91.07 in response to a smaller-than-expected decline in US crude stocks. Looking ahead, GDP and new home sales are due out later today.

The Euro (EUR) initially was sold off but recovered after the release of the Beige Book to remain relatively unchanged despite the volatility. Overall the EURUSD traded with a low of 1.4712 and a high of 1.4858 before closing the day at 1.4855.

The Japanese Yen (JPY) was sold off against the US dollar as the market sought to re-establish carry trades following news of possible rate cuts in the US. Overall the USDJPY traded with a low of 108.27 and a high of 110.48 before closing the day at 109.98. Looking ahead, industrial production is due out today.

The Sterling (GBP) benefited from the negative sentiment expressed in the Beige book recovering most of its losses from the week. Overall the GBPUSD traded with a low of 2.0584 and a high of 2.0824 before closing the session at 2.0811. Looking ahead, Gov King amongst others is speaking tonight to the Treasury Committee and mortgage approvals are due for release later today.

The Australian Dollar (AUD) was spurred by news of a bigger than expected US economic slowdown which could lead to rate cuts sooner rather than later. The Aussie was one of the big gainers in the overnight session especially against the low-yielding Japanese Yen. The AUDUSD traded with a low of 0.8721 and a high of 0.8920 before closing the day at 0.8915. Looking ahead, CAPEX is due out today.

Gold (XAU) was weaker in response to a drop in crude oil. Gold fell by US$10.20 to US$803.80 an ounce.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4692	1.4712	1.4840	1.4859	1.4908
USD/JPY	107.23	108.27	109.90	110.58	111.76
GBP/USD	2.0519	2.0584	2.0800	2.0825	2.0846
AUD/USD	0.8654	0.8720	0.8895	0.8939	0.8954
XAU/USD	773.00	791.40	805.00	815.80	829.40

Euro – 1.4840
Initial support at 1.4712 (Nov 28 low) followed by 1.4692 (61.8% retracement of the 1.4521 to 1.4968 advance). Initial resistance is now located at 1.4859 (Nov 28 high) followed by 1.4908 (Nov 27 high).

Yen – 109.90
Initial support is located at 108.27 (Nov 28 low) followed by 107.23 (Nov 26 low). Initial resistance is now at 110.58 (Nov 20 high) followed by 111.76 (Nov 14 high)

Pound – 2.08
Initial support at 2.0584 (Nov 28 low) followed by 2.0519 (Nov 23 low). Initial resistance is now at 2.0825 (Nov 28 high) followed by 2.0846 (Nov 14 high)

Australian Dollar – 0.8895
Initial support a 0.872 (Nov 28 low) followed by 0.8654 (Nov 21 low). Initial resistance is now at 0.8939 (38.2% retracement of the 0.9400 to 0.8654 decline) followed by 0.8954 (Nov 21 high)

Gold – 805
Initial support at 791.4 (Nov 28 low) followed by 773.0 (Nov 20 low). Initial resistance is now at 815.8 (Nov 28 high) followed by 829.4 (November 27 high)