A Light Calendar Ahead

Overall, the dollar weakened significantly during yesterday's trade, but the trend has been reversed since the start of the new trading day. The calendar is light for the remainder of the day, so there is a possibility the market will become directionless.

The Euro (Eur/Usd) traded mixed during the European session, unable or unwilling to move in either direction. Since the Asian session began, the euro has hovered close to the high of the previous day. However, the pattern of trading in recent weeks show the euro, as well as the overall market, will start to move once U.S. futures numbers establish themselves. During the European session, an economic report showed that the current account in the Euro-area widened much more than expected.

The Pound (Gbp/Usd) moved in a limited range in the Asian and early European session, as traders waited for the GDP report, but as the session progressed the pair began to weaken. Trade desks are looking to sell the pound ahead of the GDP number, which some expect will show the UK economy contracted for the first time since the '90s.

The Aussie (Aud/Usd) moved in a 45 pips range during the overnight session. The pair tested the high of the previous session; however, the lack of momentum doomed the breakout attempt. On the daily chart, the relative strength index is holding just below the oversold line.

The Cad (Usd/Cad) is reversing some of the recent dollar gains as oil, the commodity that backs the pair, rose $5 yesterday and has maintained its strength overnight. During the Asian and European sessions, the pair strengthened 25 pips, bouncing off yesterday's low as traders are unwilling, so far, to push the pair back below the 1.0400 level.

The Swissy (Usd/Chf) continues to bounce off the trend-line that has held the pair since July, when the dollar strength initially started. If the pair manages to break lower, below the trend line, it is very likely a wave of short orders will enter the market.

The Yen (Usd/Yen) advanced 65 pips overnight despite negative Asian equity markets. The pair is now trading at the neutral pivot point, but the outlook remains to the upside

European Session Overview European shares up despite the negative Asian close

Current Futures: Dow +25.00, S&P +2.90, Nasdaq +5.75

European Trade: European equity markets are advancing for a second day, as investors consider several stocks bargains at current prices. The equity markets have been in a downward trend for almost a year, erasing $13 trillion in market capitalization, while losses by financial institutions have reached $500 billion. The major European Indexes are advancing despite a negative close in Asian shares, following the same pattern of trading as yesterday.

The German Dax declined 13.28 points (0.21%) to 6,250.24 reaching a 5-week low. The U.K. FTSE gained 28.90 points (0.54%) to 5,399.10. Asian shares are down for the fourth week in a row, practically erasing every gain made during the last two years. The Nikkei declined 86.17 points (0.68%) to 12,666.04. The Australian S&P/Asx advance 56.20 points (1.15%) to 4,931.40.

Gold headed for its biggest weekly gain in seven years as the dollar weakened and crude oil rose, boosting the precious metal's appeal as a safe haven investment. Bullion for immediate delivery rose $1.70 (0.20%) to $841.10.

Crude oil is heading for its biggest weekly increase in more than two months after rising almost 5 percent yesterday as the dollar slumped. Crude oil for September delivery gained $0.31 (0.26%) to $121.49

Previous Asian trade: Asian equities are heading toward the fourth consecutive week decline as inflation and the credit crises erode the investors' confidence. The credit crises made re-financing very expensive for many companies,effecting the businesses that had already borrowed, pay record debt, while at the same time dramatically reducing the number of new companies that are looking for additional liquidity. One way or another, harder access to money and credit means the companies' future may not be so bright, as more losses accumulate on their balance sheets. On the other side, inflation is eroding the purchasing power of consumers and in time, this will be reflected in a weaker business, especially for the retail companies. U.S. shares closed the trading session slightly in the green, even though most of the time, the major indexes were trading under the neutral line. Equity markets in Asian opened the session lower, leading the MSCI Asia Pacific Index to the lowest point in more than two years

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.

The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.