UK CPI flat, ahead of BoE minutes. ECB inject funds, as RBA sound hawkish

U.S. Dollar Trading (USD) held firm versus a number of majors on Tuesday in a range bound session. In data news, both Building Permits and Housing Starts were released slightly higher than expectations providing further stability to the dollar. In other news the Fed also proposed new standards for mortgage lending. In U.S. share markets the NASDAQ was up 21.57 points (+0.84%) whilst the Dow Jones also rebounded 65.27 points (+0.5%). Crude oil fell by US$0.14 to US$89.70. 

The Euro (EUR) fell against the USD despite attempts by the ECB to inject 500 million into the banking system as part of a global effort to ease credit-market turmoil. Nonetheless the EURUSD traded in choppy range with a low of 1.4330 and a high of 1.4453 before closing the day at 1.4394 in the New York session. Wednesday sees the release of the German IFO survey (Forecast: 104; Prior: 104.2) whilst President Trichet will be talking before an EU economic committee. 

The Japanese Yen (JPY) eased versus a number of majors, following the injection by the ECB into financial markets which provided confidence to risk appetite traders in search of the carry trade. The USDJPY traded with a low of 112.83 and a high of 113.48 before closing the day at 113.02 in the New York session.

The Sterling (GBP) saw much of its interest surround the CPI figures for the month of November, which did not disappoint coming in on expectations at 0.3%/2.1% for the month. The GBPUSD traded with a low of 2.0113 and a high of 2.0225 before closing the day at 2.0133 in the New York session. Looking ahead, the BoE minutes will cause plenty of attention in the UK markets on Wednesday, as traders try to delve into any further indication of monetary policy.  

The Australian Dollar (AUD) gained temporary support from ECB liquid injections into Financial Markets on Tuesday, adding confidence in high yielding currencies and boosting the AUDJPY cross. Any upside moves were triggered with the first release of the RBA minutes, outlining Monetary Policy being tightened by markets, whilst the Central Bank expects a likely increase in rates, prompting markets to expect another rate hike in February. Overall the AUDUSD traded with a low of 0.8554 and a high of 0.8644 before closing the day at 0.8587 in the New York session.

Gold (XAU) rose despite the USD finding significant demand. XAU traded with a low of 790.70 and a high of 806.45
 
TECHNICAL COMMENTARY

Euro – 1.4415
Initial support at 1.4331 (Dec 17 low) followed by 1.4307 (1.4751 minus 1.4968 – 1.4528). Initial resistance is now located at 1.4527 (Dec 6 low) followed by 1.4658 (Dec 14 high).
 
Yen – 113.35
Initial support is located at 112.23 (Dec 14 low) followed by 111.42 (Dec 13 low). Initial resistance is now at 113.85 (61.8% retracement of the 117.95 to 107.23 decline) followed by 113.89 (Nov 8 high)
 
Pound – 2.0150
Initial support at 2.0102 (Dec 17 low) followed by 2.0086 (Sep 25 low). Initial resistance is now at 2.0448 (Dec 14 high) followed by 2.0484 (Dec 13 high)
 
Australian Dollar – 0.8615
Initial support a 0.8553 (Dec 18 low) followed by 0.8538 (38.2% retracement of the 0.7676 to 0.9400 advance). Initial resistance is now at 0.8654 (Nov 21 low and former rang low) followed by 0.8795 (Dec 14 high)
 
Gold – 801.40
Initial support at 785.50 (Dec 17 low) followed by 777.20 (Dec 3 low). Initial resistance is now at 806.55 (Dec 18 high) followed by 812.20 (December 13 high)