12/29/2004 6:50 am: EUR/$..1.3603 $/JPY..103.37 GBP/$..1.9204 $/CHF..1.1338 AUD/$..0.7778 $/CAD..1.2202

Euro Advances Across the Board by Korman Tam

At 10:00 AM US November Existing Home Sales (exp 6.75 mln, prev 6.75 mln)

The euro maintained its buoyant tone across the board, edging up to a fresh record high against the dollar overnight to 1.3645 and a one-year high against the sterling at 0.7080. Currency markets continue to favor the euro over the dollar as emphasis remains on the US twin deficits. Billionaire investor Warren Buffett’s bearish sentiment on the dollar has been much discussed recently, with a purported $12 billion invested in foreign currencies – he has made no secret of his continued strong positions in the euro, sterling, and several other currencies.

The greenback failed to significantly capitalize on yesterday’s better than expected consumer confidence data. The Conference Board reported that consumer confidence surged sharply in December, rising to a 5-month high at 102.3, far exceeding both 94.6 forecasts and November’s 92.6 reading.

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Euro Rises Across the Board

The euro edged up to a new record high against the dollar overnight at 1.3645, while also climbing to a one-year high versus the sterling at 0.7080 and 1 ½-year high versus the yen at 140.86. Earlier in the session, Germany’s January Gfk consumer sentiment rose to 2.9 in January, compared with a downwardly revised 2.6 figure in the previous month.

Resistance in EURUSD starts at 1.3670, followed by 1.37 and 1.3725. A move higher will target 1.3760, followed by 1.38 and 1.3850. Support begins at 1.36, followed by 1.3580 and 1.3520. Subsequent floors are seen at 1.35, backed by 1.3480 and 1.3430.

Dollar/yen Buoyed Above 103

Dollar/yen hovered above the 103-level, with resistance seen at 103.50, followed by 103.80 and 104. Subsequent ceilings are seen at 104.20, backed by 104.65 and 105. Support begins at 103, followed by 102.80 and 102.20. Additional floors are seen at 102, followed by 101.80 and 101.30.

AUD Backs Away from 0.78

The Aussie drifted away from the 0.78-level, but traded within a narrow range overnight. Support is seen at 0.7760, backed by 0.7725 and 0.77. Additional floors are eyed at 0.7670, followed by 0.7640 and 0.76. A move back above 0.78 will target 0.7840-50, followed by 0.7880 and 0.79. Subsequent ceilings are eyed at 0.7944 – the November high and 0.80.

Cable Slumps Toward 1.92

Cable encounters support at 1.92, followed by 1.9175 and 1.9130. Additional floors are seen at 1.91, backed by 1.9060 and 1.9020. Gains will target resistance at 1.9280, backed by 1.93 and 1.9330. Subsequent ceilings are seen at 1.9370, followed by 1.94 and 1.9440.