Tight Moves In The Asian Session

Overall, the market ran sluggish in the Asian session, having nothing important happening. The calendar ahead has some releases scheduled in the European session, but that is about all, the U.S. session is mostly free of reports. Today's focus will probably remain on the credit crisis, dictating the market's tolerance to risk.

The Euro (Eur/Usd) gained a small number of pips in the Asian session. The euro trades slightly above the 20-day moving average, which has been holding the pair for the last three days. In the last period, the moving average played an important role, acting as a very important swing area in the pair's price action.

The Pound (Gbp/Usd) traded flat in the Asian session, comparable to the last two days of trading. The pound is holding near the low of the current year, which is also close to its six year old bottom; it has declined for 6 months in a row. Traders should note that both in 1986, 1993 and 2001, the pound had bottomed in the 1.40 area.

The Aussie (Aud/Usd) rose 50 pips in the Asian session, and pulled an unthinkable move when it broke above the 20-day moving average, for the first time in the last month. In the last few days, the aussie traded in an extended range, moving along the moving average all session long. The real test now is to see if the pair can hold above the 20-day moving average until the close of the U.S. session.

The Cad (Usd/Cad) tested the 1.30 level on Friday for a short period. However, as the pair touched the “magical” level, a strong wave of short orders hit the market, closing the day down 60 pips. Consequently, the cad formed a pin bar on the daily chart, an important resistance level, suggesting the market might see a change in trend.

The Swissy (Usd/Chf) fell a few pips in the Asian session, continuing the move started in the late U.S. session on Friday. The pair is struggling to break above the 1.225 area for the last three weeks, but so far, it looks unable to pull the move.

The Yen (Usd/Yen) bounced off the neutral pivot point (92.60) in the Asian session, trading in a 45 pips range. On Friday, the yen had a strong rally by the session-end, to gain 60 pips, despite that all-day along it stayed under the break-even line.

The M2 money stock for Japan has increased by 1.7 percent year over year in November. This figure is slightly lower than the 1.8 percent, which was forecasted and is down from the October figure of 1.8 percent. Japan's current account for the month of October came in at 960 billion yen, which was slightly lower than Septembers 1497 billion. The adjusted current account came in at 1113 billion yen.

Shares Rose On The Newly Announced Public Plan

Asian trade: Asian shares are posting gains, helped by Mr. Obama's announcement of his plan to recover the U.S. economy. The major Asian indexes are gaining, as traders anticipate the new plan will refill the companies' order book.

The U.S. President-elect Barack Obama announced a huge public program in order to help the U.S. economy recover from the biggest financial crisis since the 1950's. Right now, the plan includes ideas on how to create new jobs in the U.S. economy. After the President's words, the plan would create about 2.5 million new jobs over the following period. Japan was hit early in 2000 by a severe credit crisis similar to the present one, adopted a similar plan. However, the highway and bridges made in that period remain known in history as “the road to nowhere” because of their low usefulness either for the Japanese infrastructure or for the economy.

In the Asian session, the Nikkei gained 203.20 points (2.57%) to 8,120.71, while the Australian S&P/Asx gained 135.20 points (3.87%) to 3,625.10.

Crude oil rose a few dimes, after on Friday it bottomed near the $40 per barrel level. Crude oil for January delivery gained $0.10 to $42.30.

Gold traded flat in the Asian session, near the resistance level that held the precious metal in the last period. Bullion for immediate delivery fell $1.20 to $760.45.

Previous Wall Street trade: U.S.stocks markets rose Friday even after the monthly jobs report showed the economy lost 533,000 jobs in November, the largest single-month drop since December 1974 when employment plummeted by 602,000. The September-though-November period saw an average 419,000 monthly job losses and the unemployment rate rose to 6.7%

As bad as the employment report was it didn't stop the S&P 500 from making a 6.95% rise off the daily low made just after markets opened, even though the report implied the economy could contract by 5% (annualized) in the fourth quarter.

'There's no question the economy is slowing rapidly,' said Matthew Carniol, chief currency strategist at TheLFB-forex.com. 'The circumstances however are very different this time given the actions taken by the Federal Reserve and the government. Aside from that, traders might be looking ahead to the economic stimulus package which is sure to come from the new Obama administration.'

Previous European trade: In Europe, the German Dax fell 119.81 points (2.62%) to 4,444.42. The U.K. Ftse declined 55.46 points (1.33%) to 4,108.15. In both overnight markets, shares were influenced by strong declines seen in the commodity market.

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

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