Currency Pair Overview

Overall: The majors moved lower in the Asian session, but to some extent, managed to find a bottom during the early part of the European trading session. The momentum was been weak, as there were no important economic news releases to influence the market during the overnight session. As such, the market was driven by risk aversion/acceptance, dictated by the U.S. futures which bottomed at about 01:00 EST and rose slightly thereafter, reversing the dollars gain against the higher-yielding currencies.

The Euro (Eur/Usd) fell 80 pips to the neutral pivot point (1.2890). From here, the euro struggled to find a direction to trade in during the European session. The pair rose slightly in N.Y as the S&P advanced about 0.25%, then fell in the afternoon once stocks turned negative.

The German trade balance surplus remained steady at 10.7B in December, the lowest level reached since June 2003. The previous number, for the month of November, was revised to 10.9B. The Sentix reading resumed its downward path, after improving last month for the first time in six months. The index fell 1.7 points from January, to -36.1. The Euro-zone's assessment is in-line with the other important regions.

The Pound (Gbp/Usd) tried to break above Friday's high in Asia but failed to do so. It fell from there to the neutral pivot point (1.4740). In the European session, the pound strengthened and continued the move into N.Y., eventually running out of steam as stocks declined in the afternoon.

The Aussie (Aud/Usd) struggled to break below the 50-day simple moving average both in the Asian and in the European trading sessions. In addition, the aussie is now trading caught between the 50 and 100-day simple moving averages. The pair rose above the 100% retrace of the last major downswing, but declined in the afternoon as stocks headed lower.

The Cad (Usd/Cad) broke 50 pips below Friday's low, but the market retraced the move very quickly. From there, the pair rose steadily, gaining about 100 pips by the middle of the European session. The pair declined in N.Y. as oil rose, then gained a bit back when crude futures turned negative after the NYMEX close.

The Swissy (Usd/Chf) tried, in the early Asian session, to break below the 1.5880 area, but could not move anywhere lower. Soon after, the swissy started to move higher, following the same direction of trading as in the last period. The pair traded steadily higher in N.Y. and looked to finish the day with a Doji formation on the daily chart.

The Yen (Usd/Yen) fell to TheLFB S1 (91.00) in the overnight session, 100 pips lower than the Sunday open and managed to bottom, before retracing some of the declines. The pair rose early in N.Y. as stocks eked out a 0.25% gain, finding resistance at the 61.8 retrace of the previous downswing.

Machinery orders for Japan fell by 1.7 percent in December, which is much better than the 8.6 percent fall that analysts had been expecting. This is third continuous month in which machine orders fell. Japan's current account for the month of December came in at 500 million yen, which was slightly lower than November's 600 million.

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

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