USD may correct higher short-term

USD may correct higher short-term, but the case for a longer sell-off midterm is intact.

The strong ISM Non-Manufacturing is changing the picture short-term. The ADP Employment Change could also support the USD before the Nonfarm Payrolls on Friday.

USD

Should be supported by the strong ISM Non-Manufacturing from yesterday. This important measure was released at a half-year high and a lot stronger than expected. The market tried to send EURUSD lower this morning, but in vain. Perhaps we will see a more decisive move at the release of the ADP Employment Change today. With pessimistic expectations around 100K, there should be room for a good surprise, when taking into account the big drop in Challenger Job Cuts yesterday.

EUR

Sold off this morning and broke intraday support at 1.3282. EUR is still too much in favor - also vs. GBP to make any decisive moves to the downside. Tomorrows ECB Press Conference with Trichet speaking could likely be a supporting factor in the short term.

CAD

Fundamentally undervalued. The sell-off in the last couple of weeks is overdone - especially with energy prices going higher. There should be a lot of upside vs. especially GBP - according to our mean-reverting model.

MAJOR HEADLINES – PREVIOUS SESSION
The strong rally in EURUSD after the break of 1.2980 is losing momentum and the bears are now getting a chance with a couple of strong US figures.

Challenger Job Cuts YoY (Nov) out at -22.7% vs. -14.9% in October
Nonfarm Productivity (3Q F) out at 0.2% vs. 0.3% expected
Unit Labor Costs (3Q F) out at 2.3% vs. 3.2% expected.
Factory Orders (Oct) out at -4.7% vs. -4.2% expected.
ISM Non-Manufacturing (Nov) out at 58.9 vs. 55.5 expected.
ABC Consumer Confidence out at -1 vs. 1 previously

Note: the support/resistance levels used in the matrix's of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.

EURUSD
Resist.
1.3475
1.3399
1.3358
1.3262
1.3281
1.3246
1.3170
Support

GBPUSD
Resist.
2.0036
1.9890
1.9810
1.9628
1.9665
1.9598
1.9452
Support

USDJPY
Resist.
116.92
115.92
115.40
115.16
114.40
113.92
112.92
Support

USDCAD
Resist.
1.1523
1.1468
1.1445
1.1430
1.1390
1.1358
1.1303
Support

USDCHF
Resist.
1.2100
1.2012
1.1967
1.1981
1.1879
1.1835
1.1747
Support

AUDUSD
Resist.
0.7984
0.7926
0.7895
0.7851
0.7838
0.7812
0.7755
Support