EUR Gains as Strong Debt Sales Ease Risk

Even though the latest data showed eurozone industrial output fell in November on weakening consumer spending capability, EUR/USD climbed after Spain sold double the targeted amount at its auction of a new 3year bond and two existing bonds maturing in 2016 and yields halved at an Italian T-bill sale.
Forex market continues to be stable despite the mixed news that has emerged over the past 24 hours. The European Central Bank kept interest rates unchanged at a record low 1% as expected. President Mario Draghi said that the bank’s massive injection of euros into the eurozone banking system in December had helped avoid a credit crunch. He also said that there was still scope for further interest rates cuts.
Today the Asian stock markets opened slightly higher on solid demand at debt auctions in Spain and Italy. NIKKEI started the day at 8,471.10, previous close was 8,385.59. HANG SENG opened at 19,200.62, previous close was 19,095.38. Chief market analyst at Securities Japan, Masayuki Otani said “The European bond sales went smoothly but there is still uncertainty ahead because of rating firms’ possible actions and worries about the region’s sovereign debt problems will not go away overnight. U.S. retail sales were weaker in December but it is expected that the recovery will be patchy and there is no denying that the economy is on track for a recovery”.
EUR/USD is trading at 1.2816 by the time of typing and for today resistances are located at 1.2872 and 1.2931. Support levels are 1.2785 and 1.2726.
GBP/USD is at 1.5338. Resistance levels are located at 1.5371 and 1.5459. Supports are located at 1.5320 and 1.5280.
USD/CHF is trading at 0.9444 by the time of typing and for today resistances are located at 0.9466 and 0.9521. Support levels are 0.9388 and 0.9331.
AUD/USD is trading at 1.0322. Resistances are located at 1.0375 and 1.0421. Support levels are 1.0284 and 1.0220.
The economic calendar is light today but these data releases can cause volatility in the forex market so it is better to be careful on the last trading day of the week.
U.K. Producer Price Index report will be released at 09:30 GMT. E.U. Trade Balance report will be released at 10:00 GMT. Statistics Canada will release Trade Balance figures at 13:30 GMT. U.S. Trade Balance and Import Prices data will be released at 13:30 GMT. University of Michigan Consumer Sentiment is due at 14:55 GMT.



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