Currency Pair Overview

Overall: The market continued to trade without the momentum seen during the Asian session. In the European trading hours the majors did nothing but range trade and in N.Y. stocks advanced, which pushed to dollar lower against the higher-yielders. The euro advanced for a third day aganst the pound ahead of Thursday's interest rate decisions from the BoE and ECB.

In U.S. economic news, Automatic Data Processing (ADP) said non-farm employment decreased 250k in November after decreasing a revised 179k in october, worse than previously estimated. The labor Department said productivity increased 1.3% in the third quarter as employers cut back on jobs. Meanwhile, the Institute for Supply Management (ISM) reported that its non-manufacturing index plunged to 37.3, 7.1 points lower than October, indicating the service sector of the economy contracted for a second straight month. It was the fastest pace of decline and the lowest reading for the non-manufacturing sector since record keeping began in 1997.

The Euro (Eur/Usd), as was the case with the whole market, lacked any direction or momentum during the overnight session. The pair traded above the neutral pivot point (1.2685) both in the Asian and European sessions, in a relative small range. The euro moved with the S&P in N.Y. and looked to finish the session little changed.

Retail sales in the Euro-area fell in October by -0.8%, while in the last month retail trade remained unchanged. The volume of retail sales from one year earlier fell by 2.1%. On a monthly basis, the food, drinks and tobacco sub-index declined by 0.5%. The non-food sector decreased by 0.9% during the last month, while from one year earlier sales fell by 0.7%

The Pound (Gbp/Usd) extended the range seen in Tuesday's U.S. trading hours to the overnight sessions. The pound traded between the neutral pivot point (1.4920), acting as resistance, and the 1.4750 area acting as support. The pair dropped after the release of the services PMI data. The pair fell and rose withthe S&P, finishing the session with little change.

The U.K. Service PMI came in at 40.1, worse than market expectations. The release shows the service side of the economy has contracted for more than seven months, at the fastest pace seen in the last decade. The PMI report only compounds the economic woes, as a staggering percentage of the U.K. economy is service based.

The consumer confidence for the U.K. fell in November to 50 despite forecasts for a decline to 54. The October reading of 55 was revised upward to 56. With the holiday season beginning, the spending index jumped from 55 to 64. Meanwhile, the expectation index fell from 70 to 63 and the present situation index also declined to 30 from a 35 seen in October.

The Aussie (Aud/Usd) moved less than 50 pips since the new trading day had started and most of the moves came in the Asian session. The pair was content to hover around the neutral pivot point (0.6425) in the European session, moving less than 20 pips. The strong declines seen lately in the gold market have not been reflected in the aussie's valuation it seems. The pair moved with the euro and pound in N.Y. trading, but looked to finish the session with a slight gain.

In trend terms, the GDP increased 0.2 percent and non-farm GDP increased by 0.2 percent. However, in seasonally adjusted terms GDP rose by 0.1 percent, which was below expectations of a 0.2 percent increase. In seasonally adjusted terms, the major contributing factors to growth were; engineering construction investment, public gross fixed capital, and inventories. Negative contributions came from imports, ownership transfer costs, and new building

The Cad (Usd/Cad) traded in the overnight session above the 1.2480 area, the same area that the pair struggled to hold above one day earlier. In the last few days, the cad has moved very little and lacked a clear direction, in contrast to the last few months when the pair established some very strong trends. The pair range-traded in N.Y. and was little changed for the session.

The Swissy (Usd/Chf) traded between the neutral pivot point (1.2050) and the first resistance level, 1.2105, during the overnight sessions. The pair was virually unchanged in N.Y. after trading within a tight range.

The Yen (Usd/Yen) continued to move along the neutral pivot point (93.20) throughout the overnight sessions. The yen tested the 93.60 area, earlier, close to the level where the pair crested one day earlier. The yen found support at 92.50 after the ISM report was released in N.Y. and looked to finish near daily highs.

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.