Friday Recap … December 11, 2009

Key News

 

* Dollar Rises to One-Month High as Retail Spurs Fed Rate Outlook  (Bloomberg)

* ECB Nowotny:No Bail Out For Troubled Euro-Zone States (WSJ)

* WORLD FOREX: Dollar, Euro Rise Vs Yen On Strong China Data (WSJ)

 

The Event Agenda

 

Afternoon Run-Down

 

After meetings from the Bank of Canada, Reserve Bank of New Zealand, the Swiss National Bank and the Bank of England this week, there was only one major surprise.  Though the New Zealand central bank maintained its guidance to keep rates are current low levels, it bumped forward the date for a possible first rate hike to mid 2010.  That, combined with better data in Australia put a short term bid under the New Zealand dollar and commodity currencies in general.

 

But the story of the week is the unusual (within the environment of past months) resilience of the general strength in the dollar.  The buck is winning on two counts…on a safe have bid from rising concern over sovereign debt conditions and on a relative growth and interest rate bid from better than expected economic data.

 

Here’s a look at the charts going into the weekend…

 

Key Charts

 

Dollar Index

The dollar bounce was initiated by the Thanksgiving Day Dubai debt restructuring and the momentum is continuing.

Euro

The euro has broken nine month trendline support and is trading at two month  highs.  The 61.8% retracement of the March low to November high comes in under   1.35.

Gold

Gold has been in a steady decline in December.  First support comes in around 1,100, then 1,000.  Most importantly, a bearish outside month is in play for gold.

Yen

Japan is rolling additional monetary and fiscal stimulus, disagreements among the Japanese Finance minister and Prime minister over limits on new debt issuance, and prospects for better relative rates in the US are all weighing on the yen.  A corrective ABC Elliott Wave structure projects a move above 94.