Yen Is Waiting For The Election

While the United States are rapidly approaching the debt ceiling (they were 63 billion dollars far from the maximum debt limit at the end of November), the coming week will allow us to understand the Federal Reserve direction for the first part of 2013 as the last FOMC meeting of 2012 will be held on December 12th. Obviously, the attitude of the Fed might influence the trend of EurUsd, which has come in contact with the resistance area 1.31/1.3150 that represents the watershed for the future development of the cross. The best tool to assist the Fed might be the XAU/USD correlation. The hammer figure, due to the closure of the gold last Friday, suggest us to enter long at 1700 with stop loss 1665.

Trade: Long XAUUSD 1700 Stop 1665
Anyway, during the following days, there will be many useful macro data to know the health state of the economy, and considering the ISM manufacturing below 50 points, published last week, these information are highly awaited.

On December 13, we will be able to know the retail sales trend the producer prices of November, on December 14 the inflation and industrial production. Retail sales and industrial production will have to recover the negative sign of the previous month.

Euro Group Before Christmas
Little macro information will come from Europe. Apart from the German ZEW index scheduled for December 11 and the political appointment of the Euro group expected on December 13 and 14, the only interesting day will be December 13 with the inflation data from Germany, France and Italy. On the same day, the UK will publish the new data on the unemployment.

The Elections Week
The Japanese elections will be the key event of the week for the Yen, a currency that is weakening on the expectations of a victory of the opposition party, which is strongly critical towards the close attitude of the Boj. Due to the fact that the markets usually buy on the expectations and sell on the news, we recommend to keep the trade short NZD/JPY, increasing below 66.00. Trade: Add short NzdJpy under 66.00

Eye On Sweden
On December 13th, the inflation and unemployment data will be published in Sweden, and this might create volatility in the Swedish Krona (SEK). There are two interesting aspects emerging from the analysis of EurSek. The first one has a technical nature: the cross is repeatedly hitting the 200-days moving average of 8.69. Since there is a potential bullish head and shoulder with neck line on 8.69, overcoming it would formalize the reversal figure with bullish target at 8.90. The second consideration is concerning the tight correlation that links EurSek to the NASDAQ Composite. If EurSek rises above the resistance, then the Nasdaq will surely fall (see graph). Trade: long EurSek above 8.70 stop 8.49.
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…And On Canada
There will be no important macro economic news in the coming weeks for Canada, but it is worth keeping an eye on the technical level achieved by EUR/CAD combined to the graphic trend of the price of aluminum. The DJUBS Aluminum, in fact, tends to anticipate with precision the primary top / bottom of EUR/CAD and in fact the resistances that they are encountering are the same. 1.30 seems to be an important level for EUR/CAD and the same applies to the aluminum between 44 and 45. Here we can start going short on EUR/CAD to increase to 1.33, stop above 1.35.
Trade: short EUR/CAD at 1.30 and add 1.33 stop 1.35
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Emerging Countries

INDIA
December 12: inflation and industrial production

BRAZIL
December 13: retail sales

TURKEY
December 10: industrial production and GDP

EASTERN EUROPE
Hungary - December 11: inflation
Poland - December 13: inflation

Last Week
The decision of Australia to cut the interest rates by 25 basis points has resulted in the decrease of the money cost at 3%, the lowest level since 2009. AUD/NZD hits 1.2610 allowing us to enter long. The AUD/USD is not surpassing the resistance of 1.05 in closure, that we had described as the best one to try the opening of a long trade. Anyway, it remains the main resistance for the Aussie. Too bad for our long on USD/ZAR closed in stop at 8.74.