Daily Market Commentary - Fundamental Outlook
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The euro appreciated vis-?-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3295 level and was supported around the US$ 1.3225 level. Technically, today's intraday high was right around the 76.4% retracement of the move from $1.3365 to $1.3050. Stops were hit above the $1.3245 level, representing the 61.8% retracement of the aforementioned range. Data released in the eurozone today saw the December manufacturing PMI survey fall to a nine-month low of 56.5 but remain comfortably above the "boom-or-bust" 50.0 level. Most of the pullback was on account of a slowdown in French manufacturing activity. Other data released today saw German employment rise 0.7% in 2006 with 258,000 new jobs created. Most traders believe European Central Bank will tighten rates by 25bps in Q1 2007. In U.S. news, U.S. markets remain closed in observance of the funeral for former President Gerald Ford. Data to be released tomorrow instead of today include the December ISM manufacturing survey. Traders await clues regarding the Federal Reserve's interest rate policy in 2007. Minutes from the Federal Open Market Committee's December meeting will be released tomorrow. Euro bids are cited around the US$ 1.3245 level.

?/ CNY
The yen appreciated vis-?-vis the U.S. dollar today as the greenback tested bids around the ?118.50 level and was capped around the ?118.90 level. Technically, today's intraday low was right around the 76.4% retracement of the move from ?121.40 to ?109.00. Yomiuri reported Bank of Japan will consider lifting interest rates at its 17-18 January Policy Board meeting but suggested a move could be delayed on account of "adjustments" between the central bank and government." Dollar bids are cited around the ?118.10/ ?117.40 levels. The euro moved higher vis-?-vis the yen as the single currency tested offers around the ?157.90 level and was supported around the ?156.90 level. The British pound and Swiss franc moved higher vis-?-vis the yen as the crosses tested offers around the ?234.50 and ?98.05 levels, respectively. In Chinese news, People's Bank of China Governor Zhou reiterated the central bank will continue a stable monetary policy in 2007. Data released in China today saw the CLSA manufacturing PMI survey recede to 52.4 while the CFLP manufacturing PMI survey receded to 54.8.

₤
The British pound moved sharply higher vis-?-vis the U.S. dollar today as cable tested offers around the US$ 1.9740 level and was supported around the $1.9635 level. Stops were hit above the $1.9690 figure, representing the 61.8% retracement of the move from $1.9845 to $1.9435. Data released in the U.K. today saw the December manufacturing PMI survey recede to 51.9, its lowest print since March. Also, Land Registry reported November house prices notched growth of 0.6% m/m and 6.8% y/y. Most traders believe Bank of England's Monetary Policy Committee will lift interest rates next month. Cable bids are cited around the US$ 1.9640 level. The euro came off marginally vis-?-vis the British pound as the single currency tested bids around the ₤0.6725 level and was capped around the ₤0.6740 level.

CHF
The Swiss franc appreciated vis-?-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2110 level and was capped around the CHF 1.2160 level. Stops were hit below the CHF 1.2120 level, representing the 38.2% retracement of the move from CHF 1.1880 to CHF 1.2270. Dollar offers are cited around the CHF 1.2180/ 1.2215 levels. The euro and British pound moved higher vis-?-vis the Swiss franc as the crosses tested offers around the CHF 1.6120 and CHF 2.3940 levels, respectively.

A$
The Australian dollar moved higher vis-?-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.7965 and $0.7915 levels, respectively. The pair has not been this strong since March 2005. Data released in Australia today saw the December manufacturing index recede to 52.4. Australia dollar bids are cited around the US$ 0.7895 level.

C$
The Canadian dollar appreciated vis-?-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1625 level and was capped around the C$ 1.1660 level. November industrial prices data will be released on Thursday. U.S. dollar offers are cited around the C$ 1.1830 level.

NZ$
The New Zealand dollar appreciated vis-?-vis the U.S. dollar today as the kiwi tested offers around the US$ 0.7095 level and was supported around the $0.7055 level. New Zealand dollar bids are cited around the US$ 0.6975 level.

Gold/ Silver
Gold gained ground vis-?-vis the U.S. dollar today as the yellow metal tested offers around the US$ 641.15 level and was supported around the $638.40 level. Widespread weakness in the U.S. dollar contributed to the pair's gains. Silver gained ground vis-?-vis the U.S. dollar today as the pair tested offers around the US$ 13.11 level and was supported around the $12.98 level.

Crude Oil
Crude oil moved higher vis-?-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for February delivery tested offers around the US$ 61.51 level and were supported around the US$ 60.75 level. The pair's upside is being limited by continued mild temperatures in parts of the U.S.