EUR/USD

The pair is expected to be vulnerable to the European official jawboning on this current high EURUSD level and its negative impact on European industries and the competitivity of the European exports and the European growth which has been already cut this year to 1.8% from 1.9 % and 1.9% from 2.3% for 2005 by the ECB which has raised the y/y EU HICP from 1.8% to 2% and Trichet has said it clearly in his last press conference after the ECB decision to leave interest rate unchanged last Thursday that the ECB has not discussed cutting rate in its meeting. It`s obvious that this year`s 100% rise of oil price has caused an inflation pressure in eurozone in spite of the rise of the pair which has been caused by the USD weakness rather than a strength of the EUR fundamentals. So, it is expected to watch another weak release of the germane ZEW for this month tomorrow on the accumulated pressure of the new high levels of oil prices and EURUSD. The EU PMI manufacturing figures of Nov was at 50.4 and it is really showing how much it is unwelcomed to see EURUSD at this level. We may see contracting figures soon.

USD/CHF

The disappointing non-farm payroll of Nov which has come at 112k and lower than the market expectations which was at 200k could cause a testing to 1.13 and this can trigger further official talking down from SNB or a real intervention.

GBP/USD

King`s upbeat comments and the strong PMI manufacturing of Nov which has been 55 have helped the pair to refresh 12 years high more than once last week to take the lead from the EUR again the USD! And this has dragged EURGBP under .69 and this is expected to be continued as the European official jawboning of an intervention in forex market which is not existing in UK yet and the weak Eurozone fundamentals comparing with UK. It is important to watch this week Oct UK trade balance.


USD/JPY

the poor non-farm payroll figure last Friday and reaching 102 level can trigger further Japanese talking down to the yen and the official jawboning on the possibility of interventions in the forex market can be joint. The pair is expected to face a resistance at 102.4. At this market conditions, it is favorable to buy the JPY crosses such as GBPJPY. The pair is really under the threat of the interventions right now and at any rate under 102 but the impact of the intervention may be moderate as the USD is really in need to go further down to finance its trade deficit and this is looking the strong USD policy!. It is important to try to watch this week Oct Machine Orders.

Best Wishes

FX consultant
Walid Salah El din
http://www.fx-recommends.com
Cairo, Egypt.