ECB injects 348 billion euros at 4.21%; BoE injects only £10billion. The Bank of Japan begins the final policy meeting of the year today with Governor Fukui clearly concerned about the effects of the US downturn on the Japanese economy. US Treasury Secretary Paulson reiterated that the turmoil in the housing market still weighs on the economy and growth will continue to be effected.


News and Events:
The European Central Bank injected an enormous amount of liquidity into the market by auctioning 348 billion euros at a rate of 4.21% which figures to 25 basis points above the repo rate. The Bank of England conducted its own injection of a mere £10 billion at 45 basis points above the repo rate.

The Bank of Japan begins the final policy meeting of the year today. Clearly concerned about the effects of the US downturn on the Japanese economy, Governor Fukui is did indicate yesterday that central banks need to step up and intervene in the markets to bring calm and restore confidence. The market is looking forward to a possible rate hike in Japan by the end of 2008.

US Treasury Secretary Paulson reiterated that the turmoil in the housing market still weighs on the economy and growth will continue to be effected. Secretary Paulson speaks on trade issues at 17.30h today.




Today's Key Issues (time in GMT):

09:00 EUR Germany IFO - Business Climate (DEC) 103.8 vs 104.2
09:00 EUR Germany IFO - Current Assessment (NOV) 109.9 vs 110.4
09:00 EUR Germany IFO - Expectations (DEC) 98.0 vs 98.3
09:00 EUR ECB's Trichet Addresses European Parliament in Brussels
09:00 EUR ECB's Liebscher Speaks in Vienna
09:00 EUR Italy Industrial Orders s.a. (MoM) (OCT) -0.7% vs 0.3%
09:00 EUR Italy Industrial Orders n.s.a. (YoY) (OCT) 4.8% vs 2.8%
09:00 EUR Italy Industrial Sales s.a. (MoM) (OCT) 1.1% vs -3.6%
09:00 EUR Italy Industrial Sales n.s.a. (YoY) (OCT)

09:30 GBP Bank of England Minutes
09:30 GBP Total Business Investment (QoQ) (3Q F)
09:30 GBP Total Business Investment (YoY) (3Q F)

10:00 EUR Construction Output s.a. (MoM) (OCT)
10:00 EUR Construction Output w.d.a. (YoY) (OCT)

11:00 GBP U.K. CBI December Distributive Trades Report
12:00 USD MBA Mortgage Applications (DEC 14)

13:30 CAD Wholesale Sales (MoM) (OCT) 0.2% vs 1.1%

18:00 USD Fed's Lacker Speaks on Economic Outlook in North Carolina

21:45 NZD Current Account Balance (3Q) -4.860B vs -2.914B
21:45 NZD Current Account % GDP (3Q) -8.2% vs -8.2%



The Risk Today:

EurUsd major support holds at 1.4280. A break below this level is very bearish. Resistance holds at 1.4540. Expect range-bound trading for now.

GbpUsd is at a critical point, hitting the lowest most trend line in the upward channel. We can expect a retracement, however the short-term trend looks bearish until 1.9880 and 1.9650 as the major targets.

UsdJpy heading for 113.90, the 61.8% retracement level of the 118.00 to 107.22 high low. Major resistance holds at 115.00. For now, anything below 115.00 is bearish. A break below 107.22 would open the door to a target of 101.70.

UsdChf hovering between 1.1630 and 1.1290. Resistance is strong at 1.7777 and anything above this level will be considered bullish. For now, the pair remains bearish with support at 1.1290 and 1.0890.


Resistance and Support:




By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland