Currency Pair Overview Another Slow Overnight Session

Overall, the currency market moved slowly during the European session, extending the Asian session’s slow pace. The economic calendar ahead is very busy, and the U.S. session is expected to be very active. Until now, the cad and the yen advanced against the dollar, the three European pairs fell lower, while the aussie moved sideways.

The Euro (EUR/USD) moved lower in the Asian session, and tested the neutral pivot point (1.2975). During the European trading hours, the pair continued in much the same fashion, and has so far been unable to muster any strength to seriously test the 1.3000 level.

In October, German import prices fell 3.6%, subsequent to the record pace it has risen in previous months. The released number of 3.6% is much larger than analyst expectations of -1.4%. From October 2007, the index rose to 2.9%, lower than in September, when it rose as much as 7.6%.

The Pound (GBP/USD) moved slowly lower in the overnight session, similar to the euro. The pound traded just above the neutral pivot point (1.5320) much of the European session, after it fell around 100 pips tonight, but managed to pare most of the losses ahead of the U.K. GDP report.

In the third quarter, the U.K. economy contracted by 0.5%, in-line with the preliminary read. In the second quarter, the U.K. economy posted a 0.0% read. Compared with the third quarter of 2007, the U.K. economy grew 0.3%.

Service output, which accounts for a large percentage of the U.K. economy, fell by 0.4%. Total production output weakened in the third quarter, decreasing by 1.1%, compared with a fall of 1.0% in the preliminary read. Manufacturing made the largest contribution to the slow down, falling 1.3 %. Household expenditure fell 0.2%. The biggest decline was in transport, where motor sales fell at a strong pace. Gross fixed capital formation fell 2.4% and is now 5.4% below the third quarter of 2007. The GDP deflator rose by 2.7% compared with the third quarter of 2007.

The Aussie (AUD/USD) traded in a very small range since the new trading day started, moving under the neutral pivot point (0.6480). On the upside, the next resistance area is in the 0.6600 area, where the 20-day moving average is also located.

The Cad (USD/CAD) traded around the neutral pivot point (1.2295), without a clear direction, since the U.S. session closed. The pair finished the last day of trading forming a large doji-candle, and tonight the cad has traded around the same open and close price.

The Swissy (USD/CHF) gained 100 pips during the overnight session, from which most of the move came during the European trading hours. In the early Asian session, the pair failed a test at the 20-day simple moving average.

The Yen (Usd/Yen) fell near the 95.00 support area during the overnight session, the same area where the pair has bottomed during the last two days of trading. The yen fell relatively fast near the support area, in the early Asian session, but since then has struggled to break lower.