US Fiscal Cliff Foreplay, ECB On Tap As Markets Look Overdone

Need to make a confession first of all, I stole the headline from one of our members in our Live Trading Room today, but I shall come onto that shortly.

Well we started the morning in good fashion with a failed Spanish bond auction.

Not so much a failure but they didn't sell what they wanted or needed to; this generally put a dampener on the euro and it progressed down towards the 1.3050 mark along with other correlated pairs. To cheer us all up, we then had the ever-charming Osborne on the wires with his Autumn statement.

To be honest, there were very few revelations in the statement but the glaringly obvious was stated that growth is actually worse than expected, it will take the UK at least another year to reduce its deficit targets, but in general it is moving in the right direction. The real challenge for the UK is that it is going to be a long hard slog back and with the eurozone fun and games one side and the US the other and reliance on both then, well, its going to make progress that little more difficult. Stiff upper lip though chaps, we'll pull through.

As if Mr. Balls' name wasn't enough, he also gave everyone at least a slight laugh as he fluffed his first line then went on to say that Osborne's reputation was in tatters...good show man, way to prove a point, more finger wagging required next time though.

Right, enough of that...onto the foreplay and back to my confession.

So I openly admit to stealing this line, so an explanation is required. The back and forth in the US bemuses me, there seems to be a lot of, he said, she said, I'm waiting by the phone for Obama to call me, why won't he call me? I'm simple and find the over-competitiveness of the two sides highly amusing. It looks like everyone needs to suffer a bit to get through this, suck it up and push forward in the true American way. Very much like the elections it seems there is more spent on the game, belittling the other person and trying to win at all costs than actually solving any problems.

Frankly, I think it's brilliant! It definitely makes for very amusing TV and commentary.

I do question whether we are missing a trick though, maybe some kind of game show, that we could use to exploit any issue in the US, maybe some kind of gladiator ring to decide; apparently it doesn't really matter what its about as long as one side wins. As the title suggests lot of foreplay but no real action.

That nice and rather tidy link brings me onto the ECB tomorrow. Everyone seems to be expecting rates on hold again.

It may be an interesting press conference, I have already called for a bit of a down December and we are starting to look over done on some of the recent moves; this gives some potential (although don't hold your breath) that the ECB press conference tomorrow could provide a bit of a catalyst.

If not for a large move south, a minor retracement at least. Ok, so why do I say this?

Well with everyone expecting rates on hold but desperate for a cut any news tomorrow could spur cut rumours and therefore potential pricing in of said rumours.

We also have two other nice scenarios; we could see very little from the ECB when people could do with something resulting in a disappointed short burst or the possibility of hints of further easing.

All this said with the way things have been lately, no doubt some choice words from Draghi will send us well past the 1.32 handle. To ensure we end on a high, I present the final joke of the day; and finally...

S&P cuts Greece's long-term debt by 4 notches to selective default thus aligning it with Moody's. We now arrive to the final levels of ridiculous junk status.

EUR/USD
Our current stance holds with the euro pulling back slightly today. Whilst we remain below the pivot high on the daily and weekly chart our bias remains to the downside. Ideally, a strong rejection of higher prices on an intraday timeframe will put us lower.

I include the weekly chart as well just to ensure you are keeping an eye on it.

GBP/USD
The cable has a bit of a choppy day with Osborne wowing the masses. We had an intra day short signal which we called in the Live Trading Room not perfect but hanging in there. The tiny double pin signal is rather weak and we would much prefer to see a retest of the pivot high before a move lower but will hold the intraday position to see how it plays out.

AUD/USD
We remain on the side with this pair as it continues to defy gravity. Strong shorts today we disappointed as the pair continues to hold. Don't get too aggressive on this one, the aussie has been a real fighter latel, better to find a nice alternative.

USD/JPY
It was going to well for our ideal USD/JPY trajectory, as well. The pair put in a strong Bullish push today on further and board based yen weakness (due to rumours of majority for opposition part in upcoming elections - opposition has a strong stance of currency easing). We maintain our strategy however and look for opportunities to buy on a larger retracement.

GBP/JPY
Yen weakness didn't help this position today but I continue to maintain the same outlook. Realistically, we are creeping a little too close to the stop but I maintain a set and forget policy on stops so its not being moved one way or the other.

EUR/SEK
Move lower again today and another small pin signal. Can move stops to this lower level if you so wish although be careful on these pairs as the ride can get choppy. Still like this for a much larger move lower.

EUR/CAD
Moved lower off of last nights signal and popped in an intraday short signal as well. We like this for a test of the next support level but I expect a small bounce on the current support level before the move lower.