Currency Pair Overview Dollar Trades Lower Overnight

Overall, the major currencies advanced against the dollar in the overnight market. Most advanced from the start of the Asian session, something that rarely happens. The dollar began to weaken yesterday shortly after the press conference held by Mr. Trichet. Although the dollar weakened overnight, it did not pull oil higher, which usually happens.

The Euro (EUR/USD) gained 100 pips during the Asian session, but since then has topped near TheLFB R1 (1.3250) and close to the 50-day simple moving average. Around this area, the euro had also topped one day before. Yesterday, the ECB reduced the interest rate by 50 basis points, but the bank hinted that it would avoid sending the rates too low.

The Euro-area adjusted trade balance was released at -4.9B in November, slightly worse than expected. In November 2008 compared with October, seasonally adjusted exports fell by 4.7% and imports by 2.5%

The Pound (GBP/USD) has continued to advance since the Asian session began. The pair is trading now just below TheLFB R3 (1.4950) and the 50-day moving average, after rising 270 pips. The pair broke in the early Asian session above the 1.47 resistance level, which held the pound down during the last few days.

The Aussie (AUD/USD) managed to break and hold above the 50-day moving average during the overnight session, but it topped near TheLFB R1 (0.6740). The aussie rose for a second consecutive day, after taking a strong plunge with the commodity market. Among the developed economies, Australia has the highest interest rate, 4.25%, but the outlook lies to the downside.

The Cad (USD/CAD) moved lower in the overnight market, even though oil is trading near the historical low of the last few years. The pair moved, in the Asian and the European trading hours, between the neutral pivot point (1.2535) and the TheLFB S1 (1.2400)

The Swissy (USD/CHF) fell 60 pips in the overnight session, paring the gains seen one day earlier. In addition, it looks like the swissy has returned to its old habit, of trading very volatile but range bound.

In the overnight session, the Swiss PPI was released at -0.7% in December, from one month earlier. The Swiss PPI stands at only 0.4% from one year ago, a very low rate that might allow the SNB to cut interest rates again at the next meeting.

The Yen (Usd/Yen) extended the gains seen on Thursday, and rose another 60 pips in the overnight session, near TheLFB R1 (90.40). This is the area that the 20-day moving average can also be found. The daily chart shows that the pair will need strong momentum to break higher, from this area.