Fundamental market overview
EUR
German Chancellor Angela Merkel said on Monday that European Union possibly faces its worst crisis since World War Two and hinted that Europe must move step-by-step towards political union, offering no new ideas on how to resolve the crisis.
USD
President Barack Obama arranged a forum of 21 Asian-Pacific nations in Hawaii this weekend with the long term goal to expand U.S. influence in the region.
GBP
An index measuring hiring intentions amid U.K. employers worsened to minus 3 in the fourth quarter from minus 1 in the previous three months, said Chartered Institute of Personnel and Development.
CHF
Swiss stocks rose slightly on Monday, after Italy appointed a new head of the national government. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, advanced 0.22%, or 12.68 points, to 5,661.71. The broader Swiss Performance Index gained 0.09%, or 4.88 points, to 5,151.03.
JPY
Japanese economy grew 1.5 percent in the third quarter 2011, compared to the previous 3 months, but outlook remains clouded with strong yen and faltering global economic growth, said the Cabinet Office on Monday.
Read full report here.
Market expectations
EUR/USD
For as long as the currency couple stays below a key resistance level located at 1.3870, the bias for EUR/USD will remain bearish. Currently the price is headed towards 1.3380/60, in case the latter line is breached, 1.3145 will be next in focus.
EUR/JPY
From above EUR/JPY is capped by resistances at 106.80 and 108.50 which will halt any rallies. The outlook for the pair is negative as it has already pierced through a support at 104.75, and is now on the way to 103.08, then 100.77.
GBP/USD
Resistances at 1.6078 and 1.6139 should be able to negate advancement of the price, while the cable is expected to step lower to 1.5833, 55 day ma. Below this level GBP/USD is likely to target 1.5632 en route to 1.5272.
USD/JPY
USD/JPY has managed to consolidate at 76.89 and is unlikely to show any weakness from now on. The primary target for the pair is at 79.44, then it will aim for 80.44, which is 55 week ma. The ultimate goal is situated at 85.53.
USD/CHF
Rebound from 0.8910 is anticipated to extend further and USD/CHF should breach the initial resistance at 0.9157. Higher levels will be encountered at 0.9341 and 0.9399. Dips will be limited by a tough support area located at 0.8555/50.
Read full report here.
Most important events of the day
Europe
New Prime Ministers in Greece and Italy are currently forming new governments in their countries; investors hope that newly elected top officials will bring their national economies back to shape.
Greece Keeping Euro Is Only Choice: Papademos
Greek Prime Minister Lucas Papademos, charged with securing international financing to avert a collapse of the economy, said keeping the euro is the only way forward for the country.
USA
The US economy indicates it is getting steam again: with accelerating CPI, inflation rate, purchases of durable goods and industrial orders, the labour market started gradually taking off, reducing the unemployment rate to 9.0%. The Fed expects it to reach 8.6% by the end of 2012.
Chance of 2012 U.S. recession tops 50 percent: Fed paper
The European debt crisis is raising the odds of a U.S. recession, with economic contraction more likely than not by early 2012, according to research from the San Francisco Federal Reserve Bank.
Asia & Pacific
Chinese trade balance widened less than expected to 17B in October; outlook looks grim.
IMF warns China’s banks face growing risks
The International Monetary Fund warned Tuesday that China’s banks face growing risks that might hamper growth, adding to concern about the world’s second-largest economy amid Europe’s debt crisis.
Read full report here.