Market Consolidates Ahead Of The U.S. Session

Overall, the market moved in a range during the European session, despite gains seen in the Asian session. Momentum is expected to pick up again as we approach the U.S. open, when some important economic reports are released. However, it will probably be just a short burst of liquidity, because of the Holiday season.

The Euro (Eur/Usd) advanced 50 pips during the Asian session, above the neutral pivot point (1.3955), but since then the pair traded in a tight range. In the last three days, the euro's opening and closing price has been in exactly in the same area, indicating market's indecision.

The Pound (Gbp/Usd) posted some small gains in the Asian markets, trying to put a stop to the lower movements seen in the last four days. However, as the market was heading into the European session, the pound gave up its gains until it reached the opening bell's price.

The Aussie (Aud/Usd) fell 50 pips in the Asian session, near TheLFB S1 (0.6750), but the pair has since bounced from that area. In the European session, the aussie strengthened and is now trading 30 pips above the Asian opening price.

The Cad (Usd/Cad) tried to break above the high reached on Tuesday, during early Asian trading, but stopped short. The cad has spent the remainder of the overnight sessions near the neutral pivot point (1.2165). In the early U.S. session, an economic report is expected to show the Canadian GDP contracted 0.3% in the last quarter.

The Swissy (Usd/Chf) headed lower since the Asian session started. The pair fell 90 pips, around the London open, at a time when the market was barely moving. For the moment, the swissy is trading below the 61.8% retracement of the trend that lasted from July to November

The Yen (Usd/Yen) fell 60 pips during the overnight session, and is now testing the 90.30 area. This area was an important swing point in the last few days. Since the Asian session began, the yen has shown little correlation with the S&P futures.

Restricted access to credit, an increasing yen and falling exports caused big Japanese firms to grow more pessimistic about business conditions, according the to latest business survey report from the Finance Ministry. Confidence among Japanese manufacturers fell the most on record as Japan slid deeper into recession. Sentiment fell to -44.5 points in the 3 months to December compared to -10 for the previous 3 months.

Important Economic Reports Loom Ahead Of Holiday

European Trade: The major indexes turned negative in the last sessions, as investors start to, once again, analyze the wave of bad economic reports coming from the world's leading economies.

Both the European and Asian markets headed lower overnight. The Nikkei lost 206.68 points (2.37%) to 8,517.10, after the market was closed for business on Tuesday. The Australian S&P/Asx gained 50.80 points (1.44%) to 3,582.20. In Europe, the German Dax is closed today, while the U.K. Ftse fell 27.81 points (0.65%) to 4,228.17.

Later today, an economic report is expected to show that consumer spending fell for a record fifth consecutive month in November. Analysts have forecast that consumer spending would fall 0.8% in November from one month earlier, but the forecasts range from -0.3% to -1.5%.

Consumer spending makes up about 70% of GDP, so a decline here is reflected throughout the economy. Furthermore, spending during the Holiday season is expected to be the worst seen in the last few decades, so retailers will have a hard time ahead. Retailers base an important part of their earnings from the Holiday season. Retailers will need a lot of time to recover from a loss taken during the holiday season.

Crude oil rose a few cents, but still remains near a record low. Crude oil for January delivery gained $0.10 to $39.10.

Gold traded without momentum in the Asian session. Bullion for immediate delivery rose $2.30 to $840.40.

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

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