Forex Daily Market Review Dec 31, 09


Market Movers of the Day


*Swiss KOF Leading Indicators worse than expected at 1.68


*US Chicago PMI surprised for the better at 60.0

*US EIA Crude Oil stockpiles dropped 1.5M barrels

The Overall Sentiment


US stock markets ended virtually unchanged in spite of the unexpectedly positive PMI figures for the Chicago region. The unpredicted rise of the Chicago PMI to 60.0, its highest level in about four years, failed to ignite investors’ appetite, which preferred to realize profits rather than open bets at the end of the year. The S&P 500 and the Dow Jones added less than 0.1% each. Profit taking set the tone for the day in European stock markets as well, putting an end to a five-day rally for its main indices. The British FTSE 100 lost 0.7% and the German DAX retreated 0.9%. The Japanese Nikkei 225 dropped 0.9% as rumors of bankruptcy for Japan Airlines sent the company’s shares down a staggering 24%.


In a low-volume day of trading, the Dollar ended with mixed results against the majors. The Euro slightly advanced against the greenback, not before an intraday drop below 1.4275, to end around 1.4340. The Pound was the best performer, rallying for seven hours in a row versus its US counterpart, to close around 1.6075. EUR/GBP topped just above 0.9050 before it dropped sharply to end around 0.8915. Mixed performances for commodity-linked currencies, as the Aussie dollar and the kiwi continued to rally but the Canadian dollar weakened for a second day against its US peer. USD/JPY extended its advance to close around 92.50, amid negative sentiment for the Yen on speculation about Japan Airlines’ bankruptcy and its potential effect on the Japanese economy.


Crude Oil advanced about $1, closing around $79.30, as the weekly EIA report showed that US stockpiles decreased by 1.5 million barrels. Gold weakened for a second day, falling to $1092.50, and Silver extended losses as well, declining to $16.75.

The Day Ahead

In the last trading day of 2009 the main attraction will be the US Jobless Claims figures due at 13:30 GMT. Initial Jobless Claims are expected to show a rise to 460K in the week that ended on December the 26th, from a previous 452K the week before.

Technical Analysis


Bullish Scenario– A daily closing below 1.5950 will trigger heavy selling pressure towards the next reliable support.

Target A1.58

Target B 1.55

Bearish scenario– A failure to break below the 1.5950 level will send the cross north in a new bullish cycle.

Target A- 1.63

Target B 1.6420

Daily Forex Market Analysis provided by eToro

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