U.S. Dollar Trading Mixed

The U.S. Dollar is trading mixed at the mid-session. Profit-taking overnight led to a lower opening, but news that S&P lowered the credit rating of Spain helped the Dollar limit losses.

The U.S. Dollar is trading mixed at the mid-session. Profit-taking overnight led to a lower opening, but news that S&P lowered the credit rating of Spain helped the Dollar limit losses.

Concern over global debt issues could be the main theme throughout the rest of day. Earlier in the week, a flight-to-quality rally was triggered by credit rating downgrades in Dubai and Greece. Traders will continue to monitor these situations for further developments.

The EUR USD erased all of its earlier gains after the S&P Corp. lowered the debt rating for Spain. Yesterday, Fitch cut the credit rating of Greece. Traders are reacting as if a trend is developing. The chart pattern suggests that the next downside target is 1.4625,

Demand for lower yielding currencies is helping to drive the USD JPY lower. This news comes on the heels of an early morning report which showed that the Japanese economy grew slower than expected.

Look for downside pressure to continue on the GBP USD now that key support at 1.6250 has been broken. The charts indicate that a break to 1.6148 is possible. Earlier today, the U.K. government released preliminary plans to shore up its finances. Traders rejected the plan and began another selling spree. Traders are also keeping an eye on the debt situation in Dubai because some U.K. bank may face exposure to the bad debt.

The USD CAD is down today but still trading inside a tight range. Yesterday the Bank of Canada announced that interest rates would remain at 0.25 percent until at least June 2010 and that it was still concerned about the strength of the currency and its possible negative affect on exports. Look for trading on both sides of 1.0598 throughout the day.

The USD CHF erased earlier losses on concerns about growing debt issues in the Euro Zone. Credit ratings have been cut for Greece and Spain this week. These actions are making Swiss Franc traders nervous because of the possible exposure to Euro Zone and Swiss banks.

On December 10th the Swiss National Bank is expected to leave its benchmark interest rate unchanged and offer clarity as to its future monetary policy plans. Most traders expect the SNB to discuss its concerns about deflation and the possibility of another round of intervention if the Swiss Franc appreciates too much against the Euro.

The AUD USD is struggling to hold on to its early morning gains. A weakening stock market could lead to more aversion to risky assets which could put pressure on this currency pair. Last night it was reported that the Australian economy is beginning to show signs of weakness after three interest rate hikes. Higher borrowing costs contributed to drops in consumer confidence, home loans and investment lending. There is a possibility that this market could rally back to .9167 before selling pressure resumes.

Tomorrow traders will be looking for the Reserve Bank of New Zealand to leave interest rates at 2.5% until at least the Third Quarter 2010 when it makes its monetary policy statement. Unemployment and a drop in exports continue to slowdown the economy. Weakening demand for higher yielding currencies is helping to put pressure on this currency pair at the mid-session. A hard sell-off late in the session in U.S. equity markets could turn the NZD USD lower for the day.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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