FOREX EUROPE UPDATE - USD

The USD was slightly lower amid a quiet session overnight in Asia after Thursday's swings, trading in a 1.3133-1.3175 range against the EUR and a 118.74-119.05 range against the JPY.

The dollar rallied yesterday as US consumer confidence hit an eight-month high, while existing home sales and Chicago PMI also came in stronger-than expected and initial claims were basically in line with consensus.

The greenback had initially suffered ahead of the North American open as ECB governing board member Yves Mersch said that Eurozone rates remained too low and policy was accommodative.

The strong data indicated improved economic activity over the holiday period and continues to ask questions on the Fed's rate outlook for next year. The implied yield on the Dec 07 Euro$ contract has gained 16.5 bp since markets returned from Christmas holidays.

However, while optimism on the US economy is on the rise after a string of positive data during recent sessions, the dollar has not strengthened sharply, indicating the market remains cautious over the economic and rate outlook for next year.

On the housing market front, our economists note that while home sales may be in the process of stabilising as prices have become more attractive, the consumer spending fallout from the abundance of unsold homes and lower prices is likely to spill over into other areas of the economy-a key risk to the dollar in the medium term.

Despite a pickup in the Chicago PMI, recent manufacturing surveys have shown broader weakness in the sector and the shadow of a weakening labour market continues to loom. Next week's non-farm payrolls data could set an early pace for the dollar's 2007 performance as the market begins to turn its attention towards broader US and global growth prospects and also the timing of potential of Fed easing.

The dollar has benefited from risk-sentiment by investors throughout the second half of 2006 and any reversal in 2007, especially if a global slowdown story comes into the fray, will pose another threat to the dollar's current resilience.

Ahead today, there are no important releases of note, and as today is the final trading day of 2006, A very happy new year to All.

Federal Reserve said delay in release of Dec 12 FOMC minutes

Federal Reserve said there will be a delay in the release of the Dec 12 FOMC minutes until (1900 GMT) on Wed 3 Jan from 2 Jan as Fed offices in Washington will be closed for a national day of mourning for former president Gerald Ford.

Precious Metals Update

Gold surged higher to 635.70, Thursday high, confirming a trend reversal from 612.17, Dec 18 low.

Beyond there exposes 638.10, Dec 8 high, ahead of 641.10, Dec 6 high before testing the key trend-line resistance at 645.40.

Intraday dips should stall above 629.60, Tuesday's high and only a loss of 620.75, Monday's low resumes bear leg towards 612.17 hammer low.

Silver continues to extend gains from the base at 12.315/12.356, Dec 18 and Dec 19 lows.

Look to buy dips above 12.635, Tuesday low. for an eventual clearance of 13.006, Dec 18 high.

Over there projects 13.255, 50% retracement of 14.195-12.315 decline, before capping for corrective dips.

Relapse of 12.395, however, reinstates bear leg towards 12.315 with a potential of a fall to 11.965, Oct 31 low and 11.899, fib.618 retracement of 10.480 to 14.195.

Platinum recovers off 1096.5 and 1097.5, Dec 7/Dec 18 lows.

Dips on pullback in the momentum indicators stalled above 1104.8, Dec 18 former high.

Expect fresh bull leg to 1130.5, Tuesday high, and 1139.5, Nov 17 low.

Above 1139.5 reinforces double bottom reversal to 1154.0, trend-line resistance, and 1164.0, Dec 5 high.

Under 1096.5 risks 1083.5, Nov 1 low instead.

Precious Metals Update

Gold is buoyant and continues its reversal from 612.17, Dec 18 low, for a clearance of 629.48, Tuesday's high.

Beyond there opens up 638.10, Dec 8 high, ahead of 641.10, Dec 6 high before testing the key trend-line resistance at 645.40.

Support above 618.20, Dec 21 low and only a loss there threatens fall under 612.17.

Silver is well supported above the base at 12.315/12.356, Dec 18 and Dec 19 lows, eyeing 13.006, Dec 18 high next.

Clearance there exposes 13.255, 50% retracement of 14.195 to 12.315 decline, before capping for corrective dips.

Relapse of 12.356, however, risks 11.965, Oct 31 low and 11.899, 61.8% retracement of 10.480 to 14.195 upmove.

Platinum pullback from Nov 21 top at 1402.5 may have ended at the 1096.5/1097.5, Dec 7 and Dec 18 double bottom.

Slow stochastics is likely to weaken, dips should stall near 1104.8, Dec 18 former high.

Bullish divergence on the MACD is signalling recovery underway.

Hence, expect clearance of 1130.5, Tuesday high ahead of 1139.5, Nov 17 low.

Over 1139.5 confirms double bottom reversal towards 1154.0, key trend-line resistance, preceding a test on 1164.0, Dec 5 high. Under 1096.5 sours for 1083.5, Nov 1 low and possibly 1073.0, Oct 31 low.

Comex Gold, Silver Drawing New Buying

Comex gold and silver are higher due to tensions over Iran's nuclear program and potential for more violence in Iraq whenever former president Saddam Hussein is executed.

The metals had been weaker lately on liquidation ahead of the end of the year.

We're starting to see some new buying come in.
There is tension in the world, and new longs entering the market in both gold and silver.

Overall, volume remains light, with many participants on vacation around the holidays in both the U.S. and Europe.
Feb gold is up $4.30 to $631.20 an ounce, and March silver is up 15.5 cents to $12.88.

Nymex will observe a "moment of silence" from 11 to 11:02 a.m. EST in memory of former President Gerald R. Ford.

UAE is selling dollars

UAE is selling dollars and Buying Euros, Central Bank Says

UAE will convert 8% of reserves to Euros by Q3 2007

Precious Metals Update - Gold resumes Bull leg

Gold extended its rebound from 612.17, Dec 18 hammer low as it cleared the trend-line resistance drawn off 638.10, Dec 8 high.

Current pullback just below the 20 day MA near 629.48, Tuesday's high should be corrective and likely to hold above 618.20, Dec 21 low.

Hence, expect recovery over 629.48 which will confirm further strength to 638.10 ahead of 641.10, Dec 6 high before testing the key trend-line resistance at 645.40.

Under 612.17 resumes bear leg towards 605.17, fib.50 level instead.

Silver has built a strong base at 12.315/12.356, Dec 18 and Dec 19 lows, for firmer recovery towards 13.006, Dec 18 high.

Beyond there exposes 13.255, 50% retracement of 14.195 to 12.315 decline, before capping for corrective dips. Relapse of 12.356, however, ignites deeper setback towards 11.965, Oct 31 low and 11.899, 61.8% retracement of 10.480 to 14.195 upmove.

Platinum poised to extend gains on further clearance of 1130.0, Tuesday high, hence averting bear trend to 1096.5, Dec 7 low.

Sustained break of 1130.0 will offset bearish pressure and confirms a double bottom reversal to 1164.0, Dec 5 high and 1168.7, 23.6% retracement of 1402.5-1096.5 fall.

Happy Christmas & Happy New Year 2007 (in advance)

Wishing Everyone Happy Christmas, and wishing in Advance Happy New Year.
Enjoy the life with your family and friends, and we hope each and every person has a nice future ahead, and brings happiness to everyone in NEW YEAR 2007, with 9 days to go.

Whats going in the market?

X-mas it getting closer. This means thin markets with more spikes in price developments.

Look out for PCE figures and Durable Goods Orders in the US session today.

EURUSD likely to trade between 1.3150 and 1.3270.

Stocks could edge higher in the Santa Rally, but watch out for lack of momentum.

Iran National Co ask payments in Euros

Iran National Oil co is asking oil buyers for payment in euros rather than dollars

US Data : 13:30 GMT out

GDP Annualized out at 2.0% vs 2.2% expected
GDP Price Index out at 1.9% vs 1.8% expected
Personal Consumption out at 2.8% vs 2.9% expected
Core PCE out at 2.2% vs 2.2% expected
Jobless Claims out at 315K vs 315K expected
Continuing Claims 2520K vs 2475K expected

FOREX UPDATE - USD

The US dollar is little changed in tight ranges overnight, with EURUSD so far holding above yesterday's 1.3161 lows.

As noted yesterday, the macro arguments for sustained USD weakness into year-end have gone into remission, with markets no longer pricing much risk of a near-term Fed easing and carry trades performing well in the wake of this week's BoJ meeting.

On the other hand, price action continues to suggest there is good interest to sell the USD into rallies from slower moving market participants who missed the big Thanksgiving week dollar collapse.

In the New Year, we expect data to bolster market concerns on the health of the US economy, and a rebuilding of Fed easing hopes should keep EURUSD pointed towards upwards

Ahead today, weekly initial jobless claims and the final report on Q3 GDP are released at 8:30 am EST, followed by the Philly Fed survey at noon. We expect claims to have rebounded sharply to 325k after last week's surprise drop to 304k, which our economists attribute to seasonal influences. For the Philadelphia number, we agree with consensus that the index will be little changed after November's big recovery.

Overall, the data is unlikely to encourage markets to rebuild Fed easing expectations significantly-we will likely need to wait for the key December releases in early January for a chance to get markets moving in the direction of our Fed forecast again.

Also of note, Fed President Lacker speaks at 1 pm on the economic outlook. He has been the loan dissenter in favour of rate hikes of late, so hawkish comments seem likely. He will no longer be a voter next year.

Futures : Treasuries Update

Another flat day on Treasuries where trading volumes are being thinner by the day as we approach Christmas Holidays.
We expect to see some range bound trading as we tested the 108.00/04 level on Tuesday which is a solid support.
A base seems to build up and we could see a relief rally in the next days.
Resistance at 108-21 lvl.

Futures : Energy Update

After yesterday’s mixed US Inventories with a built in Oil stocks but a draw on Distillates, Crude Oil has been volatile but is trading back on the pre—released figures at 63.30 level.

We could see some pressure on Crude Oil next week but the move down should be contained around the 62.40 level.

Market awaits US Data

Market is in a very tight range awaiting for US Economic Datas to be released Shortly
Heavy Movements is expected, for a watchout signal in USD pattern.

Futures : Treasuries Update

Bunds remain vulnerable to a further sell off towards 116.58 support.

Yesterday bunds tried to recover prior to German IFO, but slipped on a stronger than anticipated number (out 15 year high at 108.7 vs. 106.8 exp.).

US PPI pushed bunds below the 117.00 support level, as numbers came out exceeding expectations.

Expect a quiet session today - holding above 116.80.

Futures : Metals Update

In gold we had a strong reversal after a test of the lower support line.
Weaker USD and higher oil price made investors allocate funds into the precious metal.

Gold trading at 626-627 resistance with potential upside towards 632.00 and 643.00 (need to have a firm break through resistance).

The risk to the downside remain around 582.00 if long term support line is taken out.

Futures : Energy Update

Feb07 Crude found support ahead on weekly inventories after testing 62.28 low. According to Bloomberg survey we should expect the 4th consecutive draw in today's report.

For Crude to advance further and trade through resistance at 64.00 we need to get a larger than anticipated draw - spurring supply concern. Upside target 64.40.

Expected DOE Inventories: Crude -2000K; Gasoline 0K; Distillate -600K; Refinery 0.50%

FOREX ASIA UPDATE - USD

Strong housing starts and PPI headlines briefly boosted US yields and the USD, but the effect was short-lived, as markets focused on softer building permits and the fact that PPI jump was mostly automobile price driven.

EURUSD continued to squeeze higher after a brief dip on the data, and rose to a high of 1.3216 from 1.3129, while USDJPY traded a narrower 117.82 to 118.32 range.

As expected, the Treasury declined to label China as a currency manipulator in its semi-annual FX report released overnight. The release was a somewhat lower-key affair relative to the previous report which came out in May.

At that time, the Secretary Snow held a high profile press conference and warned that failure of China to make significant progress by the time of the next report would likely result in the "manipulator" label being used. In contrast, this time around there was no press conference, and, while the report continued to call for more flexibility, some of the more aggressive language was removed.

This is consistent with Paulson's attempt to put the exchange rate issue in a broader context and not make this a primary focus of the relationship.

This leaves the USD more dependent on the economic outlook rather than US official attempts at inducing reforms in Asian exchange rate regimes. In the new year, we expect data to re-enforce market concerns on the health of the US economy, and a rebuilding of Fed easing hopes should keep EURUSD pointed towards upwards.

Precious Metals Update

Silver is holding above the hourly base at 12.315/12.356 for the time being while oversold indicators continue to unwind. Current rebound is limited below 12.765, Nov 21 former low and renewed downside pressure will unlock 12.315 ahead of a test on 11.965, Oct 31 pivotal low. Sustained break of 13.006, Dec 18 high offsets bearish pressure.

Platinum spiked higher above trend-line off 1136.5, Dec 6 high but remains capped below 1130.0 congestion area. The overall bear trend is still in force which favours an eventual pullback towards 1096.5, Dec 7 low and 1083.5, Nov 1 low. Above 1130.5, Dec 7 high confirms strength towards 1164.0, Dec 5 high.

Gold Update

Gold looks to have completed its Consolidation period, where last week we had Consolidation moving along, and it was advisable to be on the sides, However, we have seen a big Triangle being developing, And Our Target for end of the month is 655-665 levels, which is likely to be hit, as the momentum is gradually increasing, with new Money flow is Pushing in the market.
Technically Precious Metals is ready for a big rise, as Crude Oil is moving higher with Inventories to come out today (Tuesday).
A Solid Movement Appearing on the table for Gold and Silver.
It appears this rally shall kill the 650 resistance and Push higher towards 660 zones.
As Christmas comes to near, a Rally is Expected in a Short tone, though a gradual Increase is in Hands.
615-619 level hold as a nice support.

FX Update: EUR/USD Trade Idea

EUR/USD, price action found solid support at 1.3064 levels, which is both a long and medium term fibonancci level.
We conclude that a medium term corrective action is complete and higher price is expected on the pair.
Short term, buy at dips at 1.3188, stop at 1.3168 or Break Above 1.3218(if done) stop at 1.3197, Target 1.3281

FX Update : USD Bears Back

USD MAJORS: We believe last week's USD gains were corrective and expect EURUSD will challenge 1.3368 once more. USDCHF should be heavy below 1.2291, targeting the 1.1984 bear trigger for 1.1879 and we believe GBPUSD will tackle the 1.9849 trend high again. Elsewhere, AUDUSD remains bullish, with the focus on 0.7990, while USDCAD stands out as the lone USD bull as long as 1.1445 continues to provide a floor.

YEN & YEN CROSSES: The USDJPY recovery is considered corrective below 118.61 and we are watching 116.17 as a bear trigger. EURJPY is constructive above 152.43, targeting 157.11, but support would shift to 153.80 following a break of 155.59.

EURO CROSSES: EURGBP remains vulnerable below 0.6796 and should maintain pressure on the 0.6669 level. EURCHF upside should dominate above 1.5943, targeting 1.6169.

US Data : 13:30 GMT out

PPI out at 2.0% vs 0.5% expected
PPI Ex.Food & Energy out at 1.3% vs 0.2% expected
Housing Starts out at 1588K vs 1540K expected
Building permits out at 1506K vs 1540K expected

FX Update : EUR/USD Pushes up

EURUSD found its footing in front of 1.3030, the .382 retracement of the 1.2483-1.3368 rise. The recovery from yesterday's 1.3052 is taking aim at resistance from Friday's 1.3187 reaction high. A move above there would clear the way for a run at 1.3254, the Dec 14 reaction high ahead of the Dec 12 1.3293 high.

Energy Futures Update

Yesterday Crude closed down -1.23 at 63.55/barrel as above average temperatures erased last weeks gain.

OPEC's 14th December meeting resulted in a further production cut by 500K barrels/day which took crude testing 64.15 high (Feb07 contract).

Weekly inventory data will be the number to watch this week.

Technically supported at 62.25, and with a further decline in inventories expected this week ( 4 consecutive week) - the downside seems limited.

Expect Feb07 Crude to hold 62.25 support, trading back towards the upper trendline resistance at 64.00.

FOREX ASIA UPDATE - USD

The US dollar was stable overnight with EURUSD trading a 1.3052 to 1.3119 range and USDJPY between 117.75 and 118.29.
A retracement in Fed easing expectations and a generally more stable environment for carry trades has helped stabilize the USD over the past two weeks.

Today, the last major event risk of the year arrives with the BoJ announcing its policy result anytime after 0300 GMT.
Diminished expectations for BOJ policy tightening at this week's meeting has been a key element in helping to support key carry trade currencies, including the USD, and there remains some risk that more hawkish language from the BoJ Governor following the result puts renewed pressure on JPY funded positions into year-end.

Indeed, a number of JPY crosses are looking fragile, suggesting some wariness into the result.

Absent a surprise from the BoJ, the USD seems likely to stay well supported in the final two weeks of the year, with EURUSD testing key support around 1.3030, as the thinning data calendar offers little obvious catalyst for a recovery in Fed easing expectations.

In the new year, we expect data to re-enforce market concerns on the health of the US economy, and a rebuilding of Fed easing hopes should keep EURUSD pointed towards 1.35.

Looking ahead US housing starts for November are due at 1330 GMT. Our economists suspect that the 15% plunge in starts in October exaggerated weakening in the underlying trend, and we look for a partial reversal in November.

Whats going in the market?

Watch out for Fixed Income volatility.

EURUSD not looking impressive. Expect 1.2980 to be tested in the X-mas days. We usually see some stop-hunting in the pre-X-mas days…

If USDJPY takes out the distribution around 118.50, if will be lifted towards 119.90. + the carry…

1.12 in AUDNZD is a big cross-roads. A break leads to 1.05 area, but best risk-reward it being long with a stop-reversal.

Stocks still looking good.

Precious Metals forming a Longer term triangle, as consolidation takes place, Price suggests we are in the down leg to test the support, which shall bounce and perform a new rally, crossing with 650-653 resistance for gold.

Whats going in the market?

Stocks remain strong. Still room for more upside today, but expect plenty of volatility on 4 X witching.

Crude oil coming back. Still risk is more cutting rhetoric from OPEC. Remember the big draws in API/DOE inventories lately.

EURUSD: Weakening and could be headed for 1.3030 Fibo-support. E-Z figures have been slightly disappointing lately.

NZD at risk with weakish figures lately and Nonresident Bond Holdings at record highs. Last time NBH were this high was in 1997-1998.

US Data : 13:30 GMT out

US Import Prices MoM out at 0.2% vs 0.1% expected
Initial Jobless Claims out at 304K vs 320K expected
Continuing Claims out 2477K vs 2475K expected

US Data coming out in few minutes

US Data coming out in few minutes at 13:30 GMT
Import Price Index
Initial Jobless Claims
Continuing Claims

Opec Update

OPEC said to have agreed at today's meeting to leave production unchanged but to implement a 500,000 bpd cut in February.
Crude Oil shall see Shaky Movements today.

OPEC Update -

Wire reporting comments from an OPEC delegate saying,
- OPEC has agreed to cut oil output by 500,000 bpd from Feb1
- OPEC to cut from 26.3mln bpd production target

Opec Sources say

Opec sources says to cut production by 500K per day as of Feb. 1.
NOT OFFICIAL YET

Crude Oil Futures Trade Key

Buy Crude oil Futures at 61.50/70 with a stop below 61.20. Target 63.60
Traders Awaiting for the OPEC meeting press conference later in the day but even if we could have some short term disappointment for the timing of the cut, technical and fundamentals are bullish. Its preferable to buy on weakness.

The Rally shall help the precious Metals.
Gold is trading steady at the same levels, correcting itself for a Massive Rally upwards very soon. Technically its developing. 3rd wave have taken long, however we are still in Bullish Channel.
With 622 Levels intend to grow a nice support And 615 Short term support.
Resistance at the moment is 631 with up ahead we see 650.
Target is at 680 levels, as gold shall gradually push higher, as a Rally is being developed.

OPEC Press Conference : 14:00 CET

OPEC Press conference officially scheduled to 14:00 CET, where Crude Oil Movements expected to be heavy as messages pass by down the board,
We shall also see good Movements in Precious Metals today, with Various Economic Data coming up in line, As Dollar starts to weaken again.

Crude Oil Rallies

Nymex crude jumps after EIA reports a surprisingly large draw of 4.3 mln bbl in crude stocks and an unexpected decline in gasoline inventories.

Jan crude, trading around $61.22/bbl ahead of the report's release, is now +58c at $61.60.

Jan ICE Brent turns positive to trade at $61.64, up 12c

This rally should help the Precious Metals.

Crude Oil Inventories out

Crude oil out at -4295K bs -1300K expected
Gasoline out at -174K vs. 1000K expected
Distillate out at -445K vs -250K expected
Refinery Utilization out at -1.36% vs 0.50% expected

Crude Oil Inventories coming out in few minutes

Crude oil Inventories coming out in few minutes
Crude Oil Futures Resistance at 61.20 and 61.80
Support at 60.60 and 60.20

Business Inventories out

Business Inventories out as 0.4% as expected

Data Reaction

Stronger than expected retail sales give the dollar a boost, taking euro to fresh lows for the session and reversing post-Fomc dollar losses.
Stock futures lift.
Treasuries slip
Precious Metals pushing down in strength of Dollar. Gold shall hold around 622-624 range, where Mini-Support lies.

US Data : 13:30 GMT out

Retail Sales out at 1.0% vs 0.2% expected
Retail Sales less auto out at 1.1% vs 0.3% expected

Set of US Datas today - Market trades in tight range

Market trading in tight ranges awaiting for the US Data coming out in few minutes
13:30 GMT
Advance Retail Sales
Retail Sales Less Autos

15:00 GMT
Business Inventories

15:30 GMT
DOE Crude Oil Inventories
DOE Gasoline Inventories
DOE Distillate Inventories
DOE Refinery Utilization

Gold Update

Gold is in very tight ranges, trading in sidelines for the moment, with set of US Datas to release today and Crude Oil Inventories, we shall heavy movements in the prices.
With Short-term support at 622 and 615 levels (where 200 MA and 50 MA lies).

We have OPEC meeting this week, which shall affect the Crude Oil Prices heavily, in return to Precious Metals.

Main Focus today is at the Data, to see further reactions on the prices

FOMC Discuss

As we expected there were no major changes to the post statement with similar comments from the Fed Beige book on Nov 28.
Once again, Richmond Fed President lacker dissented, he wanted another 25 bp hike.

FOMC : Statment almost unchanged

Core inflation 'elevated', still expected to moderate; keeps wording that 'some inflation risks remain'.

"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook."

Also says "recent indicators have been mixed" and notes substantial housing cooling; but then reiterates "the econ seems likely to expand at a moderate pace" ahead.

FOMC Rate decision out

FOMC Rate Decision out.
Kept 5.25% (unchanged) Interest rate as expected

FOMC Rate decision coming out in few minutes

FOMC rate decision to come out at 19:15 GMT, expectations as 5.25% (unchanged) and we expect there should be hawkish accompanying statement from Fed Chariman Bernake which is likely to be consistent with his speech from Nov 28, where it was noted that "risk to inflation forecast are to the upside and that labor markets has tightened further"....

Also said that US Economy is likely to expand at moderate pace, with global economy continues to be strong. Direction post FOMC: we dont imagine any major suprise to the statement triggering very little movements in US rates.

On the FX side EUR/USD traded 30-40 pips higher after the last statement so a great deal of volatility is not expected

FOMC chatter going on

A lot of FOMC chatter surrounds Richmond Fed Pres Lacker, the dissenter at the last 3 FOMC meetings who wants more tightening.

Today's meeting will be "Lacker's last vote" since he goes back to nonvoting status in January with the annual rotation of Fed Presidents.

Lacker has 'painted himself into a corner' -- if he fails to dissent, it would be seen as a dovish signal to the mkts.
That is not what the Fed should signal given their recent warnings and upbeat economic data

FX Update : Qatar Oil Minister says

Qatar Oil minister says oil exporters concerned about the weakness of USD

ECB Constancio Says

ECB CONSTANCIO: Reported saying,
- ECB has no target for euro exchange rate
- ECB analyses euro only for its impact on inflation
- Abrupt fluctuations in euro rate are undesirable
- Eurozone GDP should continue to grow around potential.

EUR/USD pops higher after this message passes by.

FX Update : EUR/USD Jumps up

Gets a pop higher, to $1.3255 area as traders reacted to reported remarks from an ECB official saying that the ECB has no target rate for euro.

US Data reaction

The US Trade Balance for November just had the best reading since August 2005 - i.e in more than a year.
This should support USD short-term.

Later today we have the FOMC rate Decision expected at 5.25% (unchanged).

Some Hawkish rhetoric expected at the Accompanying Statement. Which might support USD short-term

US Data : 13:30 GMT out

Trade Balance out at -$58.9B vs -$63.0B expected

US Data coming in few minutes

We have US Data coming out in few minutes at 13:30 GMT

Trade balance Expected -$63.0B

Whats going in the market?

Focus on FOMC Rate Decision tonight. They will not change rates, but we expect the FOMC statement to reflect concerns about wage pressures and the lack of productivity growth (inflationary). Also the high Core Inflation is a potential problem.

USD shall be bearish-neutral ahead of the rate decision. JPY looks extremely weak vs. European and high-yielding currencies.

Stocks grinding higher.

Crude Oil Update - Emirates Oil Minister Says

Emirates Oil Minister Mohammed al-Hamili reported saying that OPEC will examine the impact of the falling dollar at its meeting this week in Abuja.

Hamili said the "strong" fall in the dollar against other major currencies was affecting the revenues of oil producers.

OPEC will "examine this depreciation at its coming meetings ... if it continues," he said.

Crude Oil Update : Kuwait not in favor for additional oil supply cut

Kuwait not in favour of additional oil supply cut if oil prices stay at $60.00-
- Kuwait believes most OPEC states worried about impact of high oil inventories.-
- Comments come ahead of OPEC meeting on December 14, in Abuja, Nigeria

Crude Oil Update

WTI Nymex crude oil is trading lower, amid speculation that rise in crude supplies will outweigh effect of any potential OPEC cut this week when cartel meets on December 14, in Nigeria.

Also weighing on crude prices is fall in natural gas, following recent forecasts of warmer than usual temperatures in the US Northeast, over the next six to 10 days.

In additon, reports over the weekend that the U.S. Senate has approved oil and gas exploration in the eastern Gulf of Mexico.

This now opens access to an 8 million acre section of the Gulf that could potentially yield 1,300 MMbbls of oil and 6 Tcf of gas, according to The Schork Report.

WTI Nymex crude oil is at $61.50, down 53 cents.

Precious Metals in tight range await for Tuesday Fed Meeting

Comex gold and silver futures are trading near unchanged levels as the market eyes Tuesday's Fed meeting. The precious complex is feeling light pressure from the dollar's slightly firmer tone ahead of the rate decision.

We have enought support at 622-624 levels
With next support lying at 615-619.
However, Gold is already in oversold territory, with development going on still for a 3rd wave, we are looking for a rally very soon, and the correction should be ending. With Various Activities this week, which shall affect USD, Precious Metals and Crude Oil.
We expect a heavy movement appearing from Tuesday onwards.

Crude Oil Update

WTI Nymex crude oil hits 9-day lows following break below $61.53, amid speculation that rise in crude supplies will outweigh effect of any potential OPEC cut this week when cartel meets on December 14, in Nigeria.

FOREX ASIA UPDATE - USD

Supportive tone may linger ahead of FOMC The US jobs report was stronger than expected, with payrolls rising 132k in Nov, and the gains in the two prior months were revised up by 42k in total.

The unemployment rate rose only 0.1 percentage point in November versus our forecast of an increase of 0.2%. Fed fund futures contracts showed a sharp pulling back of expectations of a rate cut in the near future, with the market now imply only a 28% (7bps) chance of a cut in March from close to 50% prior to the number, and the curve re-flattened.

This helped the USD markedly on Friday and we are likely to see the supportive tone moving into the Asian session today. But we continue to expect more weakening in the jobs numbers and the USD in the coming months.

Instructively, Friday's data also showed a worse than future expectations component of the University of Michigan survey, signalling slowing in future consumer spending.

We continue to forecast that the Fed will first cut rates at the March 21 FOMC meeting next year, and we still expect rates to fall to 4.25% by the end of 2007.

At the FOMC meeting tomorrow however, we expect the Fed funds rate to remain unchanged at 5.25% with little, if any, change in the post-meeting statement.

It should still signal a continuing tightening bias with risks skewed toward inflation.

The latest batch of economic data has been mixed, but until the jobless rate rises further, the Fed is not apt to change its recent public stance on monetary policy.

Along with the Fed meeting and weekly jobless claims this week, we expect soft retail sales numbers, benign CPI data, and a weaker NY Fed index to encourage markets to price more easing risk for 2007 once again, to the detriment of the USD.

Also of note, Treasury Secretary Paulson and Fed Chair Bernanke visit Beijing, along with other senior administration officials.

Ahead today, the calendar is light just ahead of the FOMC meeting, with the wholesale inventories data for October the only release scheduled.

Paulson Makes Market Shaky

Treasurer Paulson emphasized focus on longer term progress with China relationship.Warns against protectionism. USD/JPY pushing higher, EUR/USD way down.

Paulson's comments "a strong dollar is in the nation's best interest" may have helped but mostly, players are scrambling to unwind

Paulson says China needs to move on Currency for a number of reasons1) move up the value-added chain with a market driven capital allocation2) rest of world wont tolerate China taking too long.

HE REPEATS STRONG USD in US interest.

Comex Gold/Silver Push higher

Comex gold and silver oscillate inversely to U.S. dollar movements since the November jobs report.

They were initially softer as the dollar gained ground, but the metals have recovered as the greenback since turned lower.

The employment numbers were not dramatic enough to change the outlook of the Fed being on hold next week, However, We still have inflation data to look at this month. That is tending to be more important than the employment data.

Spot Gold pushing higher at 637 levels, after Michigan as well, as further USD weakness seen.
More USD weakness is on hand, and Next week looks for a nice push.
Precious Metals holding well with USD weakness and Crude Oil Push.

Profit taking is Expected today as well, which should be a good buy in dips opportunity

FOREX EUROPE UPDATE - USD

The USD has stayed range bound this morning in Asia, trading in a 1.3278-1.3290 range against the EUR and a 115.13-115.35 range against the JPY. The markets have stayed quiet ahead of today's payrolls number.

Yesterday ECB President Trichet was coy about when the ECB would next hike rates after the central bank raised interest rates 25bps as expected to 3.50%. But market reaction was minimal.

In addition yesterday's US data showed jobless claims fell 34k to 324k, moderating from the surge in the week of Thanksgiving. But the underlying trend continues to be higher in weekly claims as the labour market reacts to the slowdown in the housing market.

Thus today's payrolls release will be critical to see whether the market wants to continue selling the USD in the near term. Our 90K forecast for the rise in payrolls in November would not be significantly different from the 92K increase in October, but it would expose a clear weakening trend - down from 134K per month on average over the last seven months and a previous trend of 170-180K.

Our US economics team also expects a 0.2% point rise in the unemployment rate. This would reverse the drop to 4.4% in October. We therefore continue to expect a 100bps cut in the Fed rates in 2007 starting from March 2007.

Whats going in the market?

Important US labor market data today. Remember, ADP Employment Change on Wednesday indicated 158K Nonfarm Payrolls today. Expectations still only 100K. The Unemployment Rate is expected to increase to 4.5%.
Looking at the majors, a correction higher in the USD is looking more likely by the day.
Potential downside in store after weak close in US stocks yesterday. But we are still in the middle of the range in European indices.

Gold Update : Gold Appears to have done its correction

Correction looks DONE.
Tommorrows Data will give HEAVY IMPACT.
It could Push Higher, or we could meet 618 levels.
The Data Shouldnt be Higher than EXPECTED. or else this will give signal Fed will Hike Again.
So If Data Less then Expected, GOOD SIGNAL

Trichet speaks

Trichet says risks to growth outlook lie on the downside

Trichet speaks

Trichet says economic outlook remains favorable
Trichet says Volatility in QTRL growth is robush, help exports,
Trichet says Domestic Demand expected to keep strong momentum
Trichet says consimption should strengthen with incomes

Trichet speaks

Trichet says ECB Decision reflects upside inflation risks
Trichet says rate increase will help anchor price expectations

Trichet says Interest rate still Low

US Data out : 13:30 GMT

Initial Jobless Claims out 324K at expected 325K
Continuing Claims out at 2524K expected 2460K

US Data coming out in few minutes

US Economic Datas coming out in few minutes at 13:30 GMT
Initial Jobless Claims 325K expected
Continuing Claims 2460K expected

FX Update : EUR/USD

Dutch finance minister says current euro level no threat to exports

Market awaits Trichet comments at 13:30 GMT

Main Focus on Trichet comments

Main Focus remains on Trichet Comments which shall move the market.
At 13:30 GMT he speaks, and Thats the time also where US Data will flow in as well.
So Expect heavy movements today

ECB Rate Decision Out

ECB Hiked 25 basis point to 3.50%

ECB Rate decision coming out in few minutes

ECB Rate decision coming out in few minutes
12:45 GMT
Main Activity is to hear Trichet speech, after the Rate Decision.

FOREX ASIA UPDATE - USD

USD Consolidation likely ahead of NFP The USD rebounded gradually on profit taking overnight, spurred during the New York session by the stronger than expected mortgage application and ADP employment data.

The mortgage applications index rose 4.9% from last week, while the refinancing index surged 13.7%. In the currently weakening housing market, however, this boost in purchase applications may not all flow through to gains in home sales and housing starts.

The ADP private payroll change for November came in at 158k, significantly stronger than the 100k non-farm payroll consensus estimate.

These data inspired more USD buying on profit taking while Treasuries saw better selling in the short end, as well as buyers of 10-years and long-dated principal strips. Adjusting to the strong ADP numbers, the swap spreads flattened as last week's steepening reverses.

But there is little evidence to suggest that the USD will strengthen from now, at least not until the crucial non-farm payroll numbers tomorrow. With the BoE and ECB meetings today ahead of the NPF on Friday, we expect the market to consolidate at current levels for now.

This though merely provides the market with the perfect breather before potentially resuming the dollar selling and carry-trade unwinding after the NFP or at the latest the FOMC meeting next week given that it remains unlikely that the Fed could get any more hawkish.

There could still be some room for a bear flattening in the Treasuries curve on a (unlikely) very strong NFP but increased volatility and our general expectation of weaker US data in coming weeks is likely to mean the USD would remain generally fragile. The environment for carry trades continues to look vulnerable on rising vols, with the NZDJPY slipping to new lows for the week yesterday and Japanese yields moving a bit higher on hawkish BoJ rhetoric.

BoJ's Iwata speaks today at a Business Conference at 0015 GMT.

Today we have, jobless claims are likely to partially reverse the run-up from the recent trend. We also forecast a weak gain in consumer credit in October.
Also BOE and ECB Rate Decision today.

Crude Oil trade key

Buy Crude Oil at 62.40/62.50 levels after the US Inventories, Target 63.20 and 63.60, Stops below 62.00

Crude Oil Rallies

Crude Oil will rally after a weaker than expected data, which is bullish for Crude Oil, in return we shall see Precious Metals gaining good support.

Crude Oil Data out

Crude Oil out at -1049 vs 500K expected, Gasoline out at -1038K vs 965K expected
Distilate out at -459K vs -850K expected
Refinery Utilzation out at 2.39% vs 0.90% expected

Gold Update

Gold Pushes Upwards after rebounding from the Zone we mentioned earlier 631-634, it bounced from around 633 levels.
Currently Market awaiting for Crude Oil Inventories to be released at 15:30 GMT, which shall move the precious metals prices.
Technically a nice building momentum going on for 3rd wave.

US ADP employment out

US ADP Employment Change out at 158K vs 100K expected.
Sign of Stronger USD, short term

Gold Update

Gold is correcting itself making a 3rd new wave rally, as stated earlier.
We are aiming for gold to bounce at around 631-634 levels, and Push higher.
Once this mini-correction is over, we are looking for a big rally towards 676 zone.
Todays Main Focus lies on Crude Oil.
As stated earlier, we nicely welcomed this mini-correction, and stays in line with our targets

Gold Update : ITS ALL BUILDING UP

IT ALL BUILDING UP.
As we mentioned Earlier, 3rd wave is preparing itself, and the Momentum is being build up, to clear the 650 resistance, to push upwards and meet the 676 levels. Currently, Technically we see a nice momentum and with USD weakness to follow by end of this year, we shall see a nice rally in Gold.
Current Prices are well Supported, with Heavy Buying Interests emerging.

FOREX ASIA UPDATE - USD

The US dollar weakened onto the 114 handle against the JPY and remained on the defensive against the EUR overnight, with more carry trade unwinding suspected, before an unexpectedly strong non-manufacturing ISM reading saw profit taking demand for the USD quickly emerge.

The non-manufacturing ISM rose to 58.9 in November, beating our expectation of 54.0 and the 55.5 consensus, after 57.1 in October. A breakdown of the data reveals some weakness, however.

The rate markets also saw profit taking after long-end yields were unable to clear their Friday lows. The German Finance Minster said following a meeting with his French counterpart that the recent USD decline was a normal adjustment and should not be dramatized or politicised.

Earlier yesterday, pressure on JPY shorts accelerated on comments late in the Tokyo afternoon from BoJ board member Mizuno that policy could still be tightened despite weaker data. In general, the yen has been gaining ground in recent days despite weak Japanese data and stable Japanese yields, suggesting the recent pick-up in currency market volatility and deterioration in risk appetite have begun to take a toll on stretched carry positions. This is likely to be a repeated theme going forward. A break in the carry trade environment into year-end would add to the dollar's woes, and we expect the recent USD weakness to continue into year-end.

Today, the ADP private payroll estimate for November will be announced. We forecast private payrolls rose 80k in November and total payrolls rose 90k, slightly below their recent trends.

Precious Metals Update

A Nice Correction done, And We are looking for a nice rise tommorrow as well Thursday, due to Crude Oil Inventories tommorrow. and ECB Rate decision, both gives signal for a Push in Precious Metals, with one hand we shall see Crude Oil Rally, and other we shall see USD weakness, as there are fair chances for ECB to Hike, with FED to Pause Next week.A Nice technical Correction appearing for Precious Metals, which is a good preparation for a nice rally soon.

Market Update

Gold/Silver pushing downward, due to Slight USD strength today, after the release of ISM Non Manufacturing data, which indeed was a suprise, Market is slight shaky for the moment.
However, Gold Is Mantaining its Strength, and Technically looks wonderful, gaining much support to push higher, Gold Shall Hold nicely at 640 level, if broken, we shall eye for 631/2 and 637/638 levels and a Swift Bounce upwards, making a 3rd new Bullish Wave.
With Crude Oil Inventories realising tommorrow, we shall see gradual push upwards for Precious Metals in relation to Crude Oil.
USD/JPY nears our target 114 levels reaching around 114.45 levels, it shall meet 114 very soon.
EUR/USD its better to trade in a safe tone, with Traders eyes for ECB rate decision on THURSDAY, and Next week for FED.

USD Strength after Suprise ISM Data

The US ISM Non-Manufacturing was improving over Octobers release and at the same time suprising quite a bit to the upside.
This is good for the USD and good for Stocks.
Fixed Income could get hurt.

ISM Non Manaufacturing out

ISM Non Manufacturing out at 58.9 vs 55.5 expected

ISM Manufacturing data awaited

Main Focus remains now on ISM Manufacturing, which can shake the USD, and further weakness to come, which shall push higher the Gold/Silver
Silver crosses easily 14.00 levels

Gold Update

We Expect Gold to break the 650 resistance today
With our Same focus at 657 levels
With Heavy USD weakness on board, next focus comes in to 15:00 GMT Data - ISM Non-Manufacturing

US Data out - DOLLAR WEAK

Non Farm out at 0.2% vs 0.5%
Unit Labor Costs out at 2.3% vs 3.2%

Important US Data coming out in few mintues

Important US figures coming up in a few minutes (13:30 GMT).
Non Farm Productivity (3Q F) expected at 0.5%
UNit Labor Costs (3Q F) expected at 3.2%

ISM Non-Manufacturing out at 15:00 GMT

Crude Oil Update -

Crude Oil is likely to push higher this month, with Jan WTI Crude Buy Signal at 62.85 levels, with a stop at 61.70, target 67.50.
Several Catalysts for higher oil prices in both the short and medium term.
With Cold Weather, seasonal factors (oil prices, oil stocks has strength from December through April) and potential OPEC output cuts.
All strongly bullish for Oil.
Technically, the bear channel since mid-September has been broken giving scope for acceleration higher.

EZ Retail Sales data out

Europe Zone - Retail Sales out at 0.3% vs 0.2% expected

Gold Update

Profit taking is going in place in the market, before the Important Datas releasing today. EUR/USD pushing down at 1.3302 levels.
Gold touches the Support lane at 642 levels, 2nd wave momentum is continue building, chances for 3rd wave to start its Consolidation. Gold is maintaing its technical correction, and Gold forsees to hit 657 and 676.
Silver trades near the Physcological Pricing, prepares itself for a push upwards 14.50 level.
Main focus today shall lye on Economic Data, which shall cause much movement in USD.

FOREX ASIA UPDATE - USD

After weakening significantly against the JPY and the EUR last week, the USD consolidated overnight ahead of the important non-farm payrolls and various central bank meeting this week and the Fed's own meeting next week, aided further by the strong rally in equities markets.

The S&P500 was up almost 1% while the Nasdaq was up 1.5% on Monday. This performance was despite the weaker than expected pending home sales index which declined 1.7%m/m after -1.1% in September. In this week's limited Fed speeches ahead of the FOMC meeting, Chicago Fed President Moskow, speaking to cnbc.com, continued to characterise the economy as "solid", although he expects sub-trend real GDP growth in 2007 of around 2.8%.

That aside, Moskow reiterated the message from the last FOMC statement when he said "I think we have to be very vigilant about inflation, very careful, and make sure it doesn't stay at elevated levels for too long". The Treasury market moved in a narrow range throughout the day and yields closed within a basis point of Friday's close.

All these spell little excitement as the market cools its heels ahead of some important policy decisions.

The ECB is widely expected to hike this Thursday, the BoC is likely to keep rates unchanged today while the BoE, RBA, RBNZ and the BoC all meet on various days of the week and are expected to keep rates unchanged as well.

In a thinned December market, caution is likely to prevail ahead of these potential trigger events. But if rates go as expected, we think the generalised USD weakness story is only likely to continue as the run of weaker data out of the US weighs.

TODAY, we expect the headline non-manufacturing ISM to reverse some of that surge in November. Q3 productivity growth will probably be revised up somewhat, following the upward revision to GDP. Perhaps more importantly, we expect a sizable downward revision to unit labour costs (ULC) after revisions to wage income. We forecast ULC at 2.9%q/q (annualized) in Q3 (consensus: 3.2%), versus the initial estimate of +3.8%, with a significant downward revision in Q2. We also forecast factory orders to have fallen 6.0% in October (consensus: -4.2%, after 2.1%).

Its Advicable to Lock Some profits in EUR/USD

Crude Oil - Opec President Says

OPEC President reported saying
- Group to take weak dollar into consideration at Nigeria meeting
- Oil price levels should be judged in light of the dollar exchange rate.

FX update

USD looks supported for the moment, with correct/consolidation phase seems to be occurings.
EUR/USD, hearing market talk about stops below 1.33 level and maybe we may see a correction to 1.3250 levels

FX Update : USD

The euro traded in a 1.3309-68 range against the USD while maintaining a fairly bid tone against the JPY (1.5376-1.5418). Market News report, French Trade Minister Christine Lagarde said a strong euro was "penalising and worrying" French exporters to Asia. "At the current level, the euro penalises exporters from the eurozone," Lagarde told AFP Sunday after arriving from Japan for a visit to India.

Meanwhile, Fed member Kohn softened his stance, commenting that inflation trends had shifted from "up to down". Should EURUSD continue to be driven by softer US data, we expect the EUR to rise for now.

Historically, the manufacturing ISM survey, the November index fell to 49.5 , has been an important variable in the Fed's monetary policy reaction function. During the Greenspan years, the Fed typically eased when the ISM index fell to around 49 or below. The current 49.5 level is thus on the border of easing territory at least. More weakening in the labor market data will still be needed, however."

Ahead of next week's FOMC meeting, the poor run of data is likely to make the market even more sensitive to this Thursday's initial claims report and Friday's employment data. We are forecasting a below trend 90k rise in non-farm payrolls and a rise in the unemployment rate, to 4.6% from 4.4% - all suggesting a slowing US economy and Fed easing in the new year.

Also of note, this past week's GDP report showed a downward revision to wage income, which implies that this coming week's unit labor costs numbers for Q3 will also be revised lower, with the y/y rate falling sharply to 3.3% from 5.3% previously. This should re-enforce perceptions that price pressures are subdued.

Today, we expect the pending home sales index to remain subdued in October , consistent with the near-flat trend in mortgage applications recently. CNBC will interview Chicago Fed President Moskow at 1400GMT.

Crude Oil Update : OPEC President says

OPEC President Daukoru reported saying
- Oil appears to be firming but market still over supplied
- Oil prices could be better than they are now
- Global economy comfortable with oil near US$60pb for US crude

FX Update : EUR/USD

EUR/USD Appears to look bullish, with Asian traders going long, and USD weakness appearing further after the lower than expected US ISM manufacturing figure on Friday.
It appears EUR/USD short term is targeting Fridays high of 1.3368 levels and possible 1.3395 levels and higher meeting our Earlier target 1.35 levels

Silver crosses Physocological Pricing

Silver Crosses the Physcological Pricing at 14.00
And Aims for 14.50 soon, with the Potential to push higher.
With Heavy USD weakness, and Crude Oil rally in process, Next week looks much brighter, for all the LONGS

Precious Metals Update

Gold is trying hard to cross Physcological Pricing, however, it appears we shall see it cross it, as the Pressure is building.
The Cross of it, will push the Gold higher, at around 657 levels, and shall see consolidation
Silver just now crossed its Physocological Pricing at 14.00
And its Approaching our WEEKLY BASED target 14.50, where we made a weekly call to buy at 13.39 levels at beginning of this week.



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FX Update : EUR/USD

So All the LONGs who listened to us for EUR/USD, should already be in Massive Profits, when we called to buy EUR/USD at around 1.31 levels.
And It was nice to see, mostly they were all our clients, Best Luck.




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Gold Update

Gold Stayed at the Level we mentioned, and as well mentioned earlier yesterday that gold will consolidate at 650 levels, And find good support at 641/643 levels.
Gold Maintaned the way, as we earlier Analysed, And with Heavy USD weakness now, Look for a Physocological Pricing cross at 650, with target to 657 levels .

Data Reactions - USD HEAVY WEAKNESS

The Data was a disaster for Stock markets and the reaction comes immidiately.
USD Pounded as stops clears above 1.3285 for EUR/USD trading now at 1.3307 levels.
As mentioned earlier, our target is approaching near.

Crude Oil : OPEC President says

OPEC President reported saying,
- OPEC likely to trim output further at Dec meeting.
We shall see push in Crude Oil prices, giving Support to Precious Metals as well

Market Update

Today, US ISM (51.8 exp) will be closely watched after the weakness in the Chicago PMA and the question mark is whether the ISM catches the weakness of the Chicago number. If it is not the case some profit taking should occur in many asset classes (EUR/USD, Precious Metals and Treasuries).

FX Update : USD

The EUR traded between $1.3232 and $1.32658 through the Asian morning and continues to face strong upside potential after closing above key resistance at $1.3220 overnight.

Technicial next key resistance approaches at around 1.3481 level.

EURJPY, having traded in a 153.07 to 153.79 range, faces more upside triggers given the market still wants to sell rallies.

Jobless claims and the Chicago PMI, pointing to a contraction in manufacturing activities for the first time since 2003, helped to push the USD lower. However, core PCE prices (up 0.2%m/m, consensus: 0.1%), and the OFHEO house price index (0.9%q/q, consensus: 0.5%) were slightly stronger than expected. The rise in claims could be a reflection of seasonal adjustment issues around the Thanksgiving holiday, but part of it is likely also a reflection of the emerging change in the trend. We are forecasting a 90k rise in payrolls in the November employment report (due December 8), similar to the 92k in October but down from 134k on average since March and a previous trend of 170-180k. At 4.46%, ten-year notes slipped through 4.5% as Treasury yields fell 5-7bps overnight, probing levels not seen since February.

The market is now rapidly pricing in more Fed rate cuts further out with the Fed Fund futures now giving a 70% probability of three 25bp cuts in Fed rates next year, and fully pricing in the first cut in June. Carry trades including long USD positions are looking more nervous. We continue to expect softening US data to boost Fed easing expectations further in the weeks ahead and look for the environment for carry trades to weaken as exchange rate volatility rises.

Today, we have the manufacturing ISM index for November, which is likely to show further moderation from the 54.0 average in Q3, construction spending, light vehicle sales. Meanwhile, Bernanke, Plosser, Moskow, and Lacker - some of the relatively more hawkish Fed officials of late - are scheduled to speak today. Moskow is the only Fed official specifically scheduled to discuss the economic outlook (0800GMT).