USD strength still the theme after yesterday's US retail sales

EURUSD broke below 1.3200 as of this writing, which gives scope of another test of retracement support at 1.3135 and possibly 1.3070 all depending on tomorrow's US CPI data.

MAJOR HEADLINES – PREVIOUS SESSION

SEK

Sweden's Annual pace of decline in unemployment rate is slower than in October, but at 0.7% on the year, the pace of decline in unemployment is still robust.
A rate hike tomorrow and the promise of future rate increases in the Riksbank's inflation report is still very much on the cards. We are looking for 3.75% rates by mid-year 2007.
EURSEK still remain a sell on rallies, look for a close below 9.0000 which would give scope for a longer term target of 8.85.

CHF

The SNB has raised the range for 3-month libor by 25bp to 1.50%-2.50%, moving the target to 2.00% from 1.75% - as expected.
The SNB commented alongside the rate hike that it expected 2006's GDP at 'almost 3% against the previous forecast of 'just below 3%. In 2007 GDP is seen at 2% against the previous 1.8%.  Inflation is seen at 1.1% in 2006 and then just 0.4% in 2007.
SNB decision: The sharp downward revision to 2007 inflation will make it difficult to argue for much tightening going forward. In the press conference the SNB is likely to backpaddle a bit on the dovish message this sends to the market, perhaps citing the risks caused by CHF funding. Impact of comments is likely to be fleeting, though.
SNB Chairman Roth comments in the post-meeting press conference that it is evident that a 2% interest rate is 'still expansionary'. Swiss economy in great shape, with balanced and broad growth. Inflation to be muted in 2007 - 2009.
SNB: The three reasons for the big downward revision of Swiss inflation given are 1) lower oil prices, 2) the opening of the labour market, and 3)the SNB's proactive monetary policy. As consequence the SNB sees limited inflationary pressure untile the Q3 2009 end of the forecast horizon. On the currency front snb president roth basically reiterated previous comments on risks.

Euro/US Dollar    

EURUSD  (1.3196 @ 12:21 GMT)

Support:

1. 1.2980 uper end of 6-month range

2.  1.2765 key support for rising wave lows.

3.  1.2460 daily base support

Resistance:

1.  1.3175 upper bull trend channel from March 2006.

2.  1.3480 old top from March 2005.

3.  1.3667 highs from 2005.

Resist.

1.3424

1.3327

1.3270

1.3196

1.3173

1.3134

1.3038

Support

British Pound/US Dollar    

GBPUSD  (1.9662 @ 12:21 GMT)

Support:

1.  1.9175 outside weeky bar from June 2006.

2.  1.8950 wave lows from late November 2006.

3.  1.8500-20 lower end of the daily range.

Resistance:

1.  1.9550 highs from december 2004.

Resist.

1.9913

1.9790

1.9729

1.9662

1.9606

1.9544

1.9421

Support

US Dollar/Japanese Yen    

USDJPY  (117.54 @ 12:21 GMT)

Support:

1.  115.55 wave low from April (key level as it would take our weeky lower high/higher high, which would confirm accelerated downside)

2.  113.35 weekly base support.

3. 109.00 key support form confirmation of a monthly downward trend.

Resistance:

1.  119.20 choppy range base from early October.

2.  119.90 old top from mid-October.

3.  121.40 old top from December 2005.

Resist.

119.28

118.29

117.93

117.54

116.94

116.30

115.31

Support