GBP/USD Forecast Dec. 6th, 2011, Technical Analysis

GBP/USD had a back and forth session on Monday as traders first bought it up, and then sold it off. The main reason was the fact that the meeting in Europe between Sarkozy and Merkel produced what was called a framework for fiscal union, and a new treaty for the EU. The afternoon in America saw the S&P ratings agency put 15 of the countries in the EU on “Credit Watch Negative”, and this deflated the gains that the Euro saw.

The Pound lost ground simply because of the fact that the two economies are so intertwined. The UK sends 30% of its exports to the EU, and this will impact the GDP of the UK in a strong way if the EU falls into recession, or has a meltdown. The EU is also where a lot of UK banks have their cash parked. The banks in the UK are knee-deep in the mess on the continent.

The GBP/US is also a “risk on” trade, and the Dollar got a bid in the afternoon all around. The resulting candle is a shooting star and the top is sitting right at the 1.57 handle. This shows that perhaps we are seeing more pressure to the downside in this pair as the bounce has just been sold. The 1.55 level underneath is support, and that support runs all the way down to the 1.53 level.

With all of this in mind, we are selling rallies in cable. The breaking below the lowest levels from the Monday session will send more sellers into the market, and should see at least the 1.55 level. The bearishness could continue down to 1.53, but that level has acted as extremely tough support. The breaking below that level would send this pair much lower, and would without a doubt have us looking for 1.50 before it is all said and done.

We won’t buy the pair as there are simply far too many risks involved in selling the safest of all currencies right now, the US dollar. Because of this, we are very patient and willing to wait until the Pound rises in order to keep buying Dollars.

GBP/USD Forecast Dec. 6th, 2011, Technical Analysis GBP/USD Forecast Dec. 6th, 2011, Technical Analysis

EUR/GBP Forecast Dec. 6th, 2011, Technical Analysis

The EUR/GBP pair fell hard on Monday as traders abandoned the Euro in droves. Although there was good news coming out of the meeting between Sarkozy and Merkel in the form of a framework for fiscal union, the afternoon saw a sell off as the S&P ratings agency said at they are putting 15 Euro countries on “Credit Watch Negative”. As this was announced, the Euro got hit across the board.

This pair is essentially an argument of two unloved currencies. The Pound isn’t exactly one that the trading community has been excited about either. The result has been an extremely range bound market that has been stuck between 0.8650 and 0.8500. The range should continue to be the outer limits of this market, and it will take some kind of special move in order to make this pair escape that area. However, once it does – this pair could go onto a larger move overall. The most recent trend has been somewhat negative, but not impressively so. Because of this, we feel that the rallies are to be sold as it seems to take less to push this pair down than it does to lift it up.

The UK economy is heavily exposed to the EU as well, as 30% of the UK’s exports end up in the EU. Because of this, as the Europeans enter recession; this will significantly impact the economy of the UK in the longer-term. With this in mind, this pair will continue to be choppy and range bound, and this pair might have a downward bias – but the truth is that Europe’s pain is also the United Kingdom’s pain. The pair should continue ot be range bound for the foreseeable future, barring any real meltdown in Europe.

EUR/GBP Forecast Dec. 6th, 2011, Technical Analysis EUR/GBP Forecast Dec. 6th, 2011, Technical Analysis

USD/CHF Forecast Dec. 6th, 2011, Technical Analysis

The USD/CHF pair had an extremely quiet session on Monday as traders seem to be waiting for the results of the EU summit at the end of the week. The Franc has traditionally been a “safe haven” currency, but with the recent actions by the Swiss National Bank, the ability for traders to buy the currency has been severely impacted.

The Dollar is the lone “safe haven” at the moment, and as a result it has a bit of a built in bid in these types of markets. Switzerland’s biggest problem right now is Europe, which is by far its largest export market. With your customers not being able to afford your goods, this is bad news to say the least.

The pair has had signs of massive support in the 0.9000 level, and this should continue in our minds as the SNB is willing to get involved when the markets buy far too many Francs. The last couple of sessions have seen green candles, and even a hammer that suggests that the market wants to get long.

A breaking of the recent highs at the 0.93 level would be massively bullish in this pair. The 0.95 level is the next target if we can get through there, and the parity level would be next. The fact that you really can’t buy the Franc without fear of intervention makes this trade a one-way affair. The selling of this pair could be a quick way to find losses in this market, and as a result we continue to buy the dips as long as we can maintain a level above the 0.90 handle. The 0.85 level is roughly where the intervention talk from the Swiss National Bank sent this pair previously and we see that level as the “ultimate bottom”. We will continue to look to the shorter-time frames for dips that we can buy in this pair. If we get above the recent highs, we could see a long-term buy and hold trade form in this pair as the Swiss continue to work against their currency.

USD/CHF Forecast Dec. 6th, 2011, Technical Analysis USD/CHF Forecast Dec. 6th, 2011, Technical Analysis

EUR/CHF Forecast Dec. 6th, 2011, Technical Analysis

EUR/CHF had a whippy day on Monday as traders first reacted to the meeting between Merkel and Sarkozy with relief. The meeting supposedly has formed a framework for fiscal union in the EU, and this is what the markets have been waiting for. With this in mind, the pair rose in value during the earlier part of the session.

However, during the US afternoon, the ratings agency S&P was rumored to be putting all of Europe’s AAA-rated countries on “Credit Watch Negative”, meaning that a downgrade could be coming for some of the region’s strongest economies. The idea of a Germany, Finland, or France losing their rating would weaken the concept of a “super bond” that so many are looking for. This would certainly punish the EU in many unforeseen ways.

The pair has been stagnant over the last couple of months since the Swiss National Bank put in a “floor” of 1.20, and the market has abandoned the once great one-way trade south. The selling of this pair is going to be difficult to do over the long-term as the SNB looks more than willing to get involved. The owning of the Euro is very difficult at the same time, and because of this – we are presently calling this a “scalper’s market”. The recent range of 1.20 – 1.25 should continue to be the boundaries for this pair, with the 1.20 being avoided like the plague. Because of this, we are basically seeing most of the trading in a 200 pip range above that bottom.

The trading of this pair for the long-term will be best served when the EU gets the debt crisis under control. This pair is set to possibly rise again anyway, as it is rumored that the Swiss National Bank is thinking of raising the “floor” form 1.20 to the 1.25 level and then perhaps to 1.30 in the end. The owning of this pair on the buy side could eventually be the trade of your career, but we need to see a reason to own the Euro first.

EUR/CHF Forecast Dec. 6th, 2011, Technical Analysis EUR/CHF Forecast Dec. 6th, 2011, Technical Analysis

AUD/USD Forecast Dec. 6th, 2011, Technical Analysis

AUD/USD rose a bit during the Monday session, but mainly appeared somewhat lost and directionless. The pair has seen strong gains recently, and as a result – this positive day is more impressive than the candle would suggest. The pair is going to be sensitive to the headline risks out there, so sudden moves could be coming.

The 1.03 level continues to work as resistance currently, and as a result we are looking to see if the pair can close above it. If we get weakness in that area, we wouldn’t hesitate to sell at that point as the moves have been overdone recently. The gap from two weekends ago hasn’t been filled yet, and that is something to consider as well if we get bearish momentum.

Until we see a close above 1.05, we won’t be buying this currency as the headline risks will continue to flow and the Chinese economy is starting to slow down. The Aussie are heavy exporters to China, so the two economies are linked very tightly. The trouble in China will certainly hurt the Aussie if it picks up.

The downside sees the parity level as potential support, and if we fall below the hammer from the Thursday session we could see a run to it. The level would have us thinking about taking profits or at least setting stops at breakeven. The breaking below of the parity level would have us even more bearish if we get a close below it.

We prefer selling the rallies, as we just don’t see a scenario that suggests that the “risk on” trade should be piled into. The Aussie will suffer because of the global concerns, and not of their own doing unfortunately. It should be noted that the Aussie has been stronger than its cousin the Kiwi, and we expect that to continue to be the case going forward. With this in mind, when the markets fall strongly, we will prefer looking at selling the Kiwi as a “safety trade”. The Aussie will fall as well, but the recent action suggests that it will put up much more of a fight.

AUD/USD Forecast Dec. 6th, 2011, Technical Analysis AUD/USD Forecast Dec. 6th, 2011, Technical Analysis

USD/CAD Forecast Dec. 6th, 2011, Technical Analysis

USD/CAD had a relatively quiet day on Monday. The pair is highly sensitive to the oil markets as the Canadians export so much to the United States. The pair is often used as a proxy for oil by currency traders and as the oil markets were back and forth – so was this pair.

The biggest problem with trading this pair is that the two economies are so intertwined. The Canadians export over 80% of their goods to the US, and as the US economy goes, so does the Canadian one eventually. However, the pair does move quite suddenly once it breaks out of the common consolidation that this pair sees.

Currently, the 0.99 to parity level is massive support for this pair. As long as this pair can stay above that level, the bias is going to be to the upside over the long run. The US dollar and its “safe haven” status will continue to favor the Dollar as long as the world is so concerned with the situation in Europe, and the job markets continue to be soft in the USA. The trading world will buy Treasuries when the recessions hit, and as a result will be buying Dollars.

There is massive resistance in the 1.05 area, and that is where we will need to break through in order to get a serious rally going in this pair. Although we feel that the pair will have an upward bias, it looks like this pair could be range bound for the foreseeable future. Perhaps we will have to retest that area several more times before escaping the range.

The Monday candle is a hammer, and is sitting just above the 1.01 level, which has shown us some minor support lately. Although we don’t think of it as a major area, the breaking to the upside from the Monday range will be a very bullish sign as the buyers will have clearly been stepping in at that level. We don’t like selling, at least until we break below the 0.99 level, a couple of hundred pips below where we sit presently.

USD/CAD Forecast Dec. 6th, 2011, Technical Analysis USD/CAD Forecast Dec. 6th, 2011, Technical Analysis

NZD/USD Forecast Dec. 6th, 2011, Technical Analysis

NZD/USD had a very, very, very quiet day on Monday. The pair is highly correlated with the commodity markets, and as such reacted very mildly to a fairly quiet day in that trading environment. The Kiwi is presently one of the favorite pairs for the bulls worldwide, and as a result will always have at least some kind of bid under it.

However, the pair has recently made a new swing low, and hasn’t filled the gap from two weekends ago. Because of this, a fall is probably coming soon. The 0.8000 level would have to be broken to the upside for us to be convinced otherwise. The “risk off” environment we find ourselves in has us doubting that this pair will manage that feat in the near future. With this in mind, we are actually bearish this pair, but waiting for some kind of confirmation.

The breaking of the hammer from Thursday to the downside is what we are waiting to see before shorting this pair. The market moving lower than that level would should significant support eroding, and this would more than likely has the pair continuing the downtrend that we have seen over the last several months. The pair is going to be very sensitive to the headline risks out there presently, and as a result it is one of the first pairs we sell when bad news is released. The pair is a fairly illiquid pair, and as a result we could see exaggerated moves considering we are getting closer to the holidays and the volumes in general should be lighter the longer we get into the month of December.

Not until we see a daily close above the 0.8000 level would we consider buying this pair. The global risks are currently far too great to consider it now, and as a result we still prefer to sell rallies as long as we are under that level, or selling the above mentioned breaking of support from the Thursday session. The closing above 0.8000 would have an effect of a short-term trend change again, so anything above there has to be taken seriously.

NZD/USD Forecast Dec. 6th, 2011, Technical Analysis NZD/USD Forecast Dec. 6th, 2011, Technical Analysis

Oil Forecast Dec. 6th, 2011, Technical Analysis

Light Sweet Crude

The Light Sweet Crude markets rose during the start of the Monday session as traders reacted positively to the meeting in Europe between Sarkozy and Merkel. The market ran up to the $102.50 level, and then fell as the resistance held true. The resulting candle for the session was a shooting star, and it looks like we may see a bit of a fall from this level, and the $100 level will continue to be the start of massive resistance. We see a pullback coming, perhaps to the $95 level. We would be sellers on a break below the lows of Monday, but only for a few Dollars as this market is incredibly buoyant.

We see the $95 level as support, as well as the $90 level underneath. The market is going to find support at one of these points, so we would also be willing to buy in this area once we get a supportive candle such as a hammer or bullish engulfing candle in the area.

Oil Forecast Dec. 6th, 2011, Technical Analysis Oil Forecast Dec. 6th, 2011, Technical Analysis

Brent

The Brent markets actually fell over the session and formed a shooting star like its cousin the Light Sweet Crude market. The recent range looks set to continue, being between the $112.50 and $105 levels. The market looks set to fall from here, but will find limited downside as the grind continues. With all of the uncertainty around the world presently, the market more than likely doesn’t know what to do. Because of this, all we can do in the Brent markets is trade back and forth in a day trading manner as any gains will be short-term in nature. The selling of this market isn’t the easiest thing to do as the market seems to defy gravity with the fundamentals being so weak, but the truth is the grind has been going on for some time now, and there is nothing in this chart to suggest that it is going to change anytime soon. The $110 level seems to be a bit of equilibrium of sorts in this market, so the commodity should continue to be attracted to it.

Natural Gas Forecast Dec. 6th, 2011, Technical Analysis

The natural gas markets fell again on Monday as the trend downward continued. The market has fallen precipitously over the last several months, and there is absolutely no end to this downward spiral in sight. The $3.50 level has put up a nice fight, but the close on Monday suggests that the level is about to give way at this point. The breaking lower of the Monday lows would send this market down and looking for the $3 level eventually.

The buying of this market is almost impossible as catching a falling knife is one of the worst things a trader can attempt. This is the epitome of a strong bear market, and because of this we cannot step in front of it at this point. In fact, the $4 level needs to be broken to the upside in order for us to consider buying this massively downbeat commodity.

The supply in natural gas is far outstripping the demand, and should continue to do so for the foreseeable future. The US has over 14 Trillion Cubic Feet of proven reserves in this commodity, and as a result it will take something extraordinary to drive this market up over the long-term. Because of this fact, we are long-term sellers of natural gas, and would never seriously consider a long-term buy even if we get over the above mentioned $4 mark.

The short-term looks like a sell at $3.43, and at that point we are looking for a dime in profits. The next leg down will be much like the previous one: down, strong, but choppy. The move won’t be sudden as the winter in the US does bring more demand, and traditionally the market likes to rise during this time. (It won’t this year; rather it will keep it from falling too quickly.) Natural gas is a “sell only” market at all times. We are either short of it or flat of it…nothing else at this point in time, and will not be changing that for the foreseeable future as the supply is getting so expanded, that the natural gas suppliers are running out of places to store it.

Natural Gas Forecast Dec. 6th, 2011, Technical Analysis Natural Gas Forecast Dec. 6th, 2011, Technical Analysis

Gold Forecast Dec. 6th, 2011, Technical Analysis

The gold trade has been very good to a lot of traders around the world. It is because of this that it is suffering lately. The gains that traders are seeing lately are often the first ones to be sold off to recover losses from other markets, and the gold market is often one of the first markets they sell when they need to raise cash. With this in mind, it is difficult for the trader to remain bullish at times, but the last ten years have seen large gains and one should remember this when trading gold.

The recent action hasn’t been very encouraging though. The Friday session saw a bearish shooting star form at the $1,750 level and Monday saw the bottom of the range broken to the downside, signaling more selling at this point. The market will certainly have support below though, and as long as those levels are there, we aren’t interested in selling at this point.

The $1,700 level will be the first real supportive area that the market will test soon. It certainly looks very frail at this point, but only in the short-term. The entire area between $1,600 and $1,700 is one massive support level and should be a great area to buy the market going forward. The market has an extremely bullish tone to it in the long run, and we are only willing to buy overall because of this. In order for us to start selling, we would need to see a close below the $1,600 level as this would represent a massive breakdown in an otherwise massively bullish market.

The fiat currencies around the world are not loved at this point, and because of this we think the gold markets will continue to get bid in the long run. The market should find the above mentioned levels very supportive, and we want to find supportive candles in that zone in order to buy. Once this happens, we will not hesitate to buy this market. The next couple of days could still have a negative tone, so we will simply wait for our opportunity.

Gold Forecast Dec. 6th, 2011, Technical Analysis Gold Forecast Dec. 6th, 2011, Technical Analysis

Natural Gas Forecast Dec. 06, 2011, Fundamental Analysis

Natural gas prices dropped on Monday for a second day, as weather forecasts suggested that temperatures will be at or above their average in the Midwest and Northeast of the United States, which led to speculations of falling demand for natural gas as a heating fuel, putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be higher than average over the coming period, and that could put natural gas prices under pressure over the coming days.

Crude Oil Forecast Dec. 06, 2011, Fundamental Analysis

Crude oil prices extended the gains on Monday, as mounting tensions between Iran and the west continued to provide support for crude oil prices on concerns of supply disruptions from the world’s fifth largest oil exporter. Moreover, hopes that EU leaders could find a resolution to the debt crisis boosted optimism in markets and encouraged investors to target higher yielding assets including crude oil.

The situation in Iran could still provide more support to crude oil prices, especially if the United States and Israel decided to take military action, although for now that is an improbable scenario, but further unrest in the middle east region could provide more bullish momentum to crude oil prices.

Traders will continue to monitor the developments from Europe regarding the debt crisis, where reports suggest that Germany and France reached an agreement on a plan to ease the European debt crisis. Nonetheless, tensions remain elevated in financial markets, as investors are concerned that EU leaders will fail to reach an agreement again after suffering similar disappointments over the past few months.

Our overall outlook for crude oil prices has changed somewhat to the upside, where rising tensions between Iran and the west could provide crude oil prices with bullish momentum, while optimism over the outlook of the European debt crisis could also support crude oil prices. Nonetheless, the prospects of slowing global growth could put negative pressure on crude oil prices, but the bias has changed to the upside.

Tuesday December 6:

The euro zone will start the session at 10:00 GMT with the GDP figures for the third quarter in a preliminary reading, where the quarterly and annual seasonally adjusted indexes could have lingered at 0.2% and 1.4% respectively.

Gold Forecast Dec. 06, 2011, Fundamental Analysis

Gold prices fell on Monday following the biggest weekly rally in more than a month, where investors were cautious ahead of the ECB meeting and the EU summit, as even the weakened U.S. dollar couldn’t help push gold prices higher.

Traders will continue to monitor the developments from Europe regarding the debt crisis, where reports suggest that Germany and France reached an agreement on a plan to ease the European debt crisis. Nonetheless, tensions remain elevated in financial markets, as investors are concerned that EU leaders will fail to reach an agreement again after suffering similar disappointments over the past few months.

Accordingly, we should expect more fluctuations in prices, especially amid the lack of economic fundamentals from the United States throughout this week, and the main focus accordingly will be the developments in Europe and whether EU leaders can craft a plan to resolve the worsening debt crisis.

USD/CAD Forecast Dec. 06, 2011, Fundamental Analysis

The USD/CAD pair fell to the downside on Monday, where optimism spread through global financial markets ahead of the ECB meeting and the EU summit later this week, where investors were hopeful that EU leaders can craft a plan to ease the worsening debt crisis inEurope.

The USD/CAD pair could fluctuate heavily on Tuesday, where the Bank of Canada will announce its decision on interest rates, as the BOC is expected to leave rates unchanged at 1.00%, yet investors will be eyeing the accompanying statement for clues over the BOC’s monetary policy path.

Traders will continue to monitor the developments from Europe regarding the debt crisis, where reports suggest thatGermanyandFrancereached an agreement on a plan to ease the European debt crisis. Nonetheless, tensions remain elevated in financial markets, as investors are concerned that EU leaders will fail to reach an agreement again after suffering similar disappointments over the past few months.

The USD/CAD pair could still drop if the current wave of optimism continues to dominate markets, but we still expect volatility to continue to dominate trading, as uncertainty remains the dominant theme in markets, and that could also lead to high levels of fluctuations for the USD/CAD pair.

Tuesday December 6:

Canadawill release the building permits index for October at 13:30 GMT, where building permits fell in September by 4.9%, and projections show building permits increased by 1.6% in October.

The Bank of Canada will announce its decision on interest rates, where the BOC is expected to leave the benchmark interest rate unchanged at 1.00%.

The Ivey PMI for November will be released at 15:00 GMT, which is expected to rise to 55.0 from 54.4 in October.

GBP/USD Forecast Dec. 06, 2011, Fundamental Analysis

The better than expected PMI services from the United Kingdom in November helped sterling sustain further gains against the dollar which was further supported by the prevailing risk appetite in the market.

The data from UK eased the woes over the state of the economy and the extent of damage from the spreading debt crisis that worsened in the past period, where the expansion in the critical sector eased the fears over the recession spreading rapidly to the United Kingdom and further pinned that the BOE will not take action this month on the APF.

We can still see high volatility for the pair as it remains very vulnerable to the market sentiment and on Tuesday we expect sterling to continue to trade inline with the prevailing trend for risky assets and as the sentiment improves the pair will be able to extend the gains, though trading will likely remain choppy.

The lack of data from both the United Kingdom and the U.S. will keep the European debt crisis the main topic and as investors’ sentiment improves further on hope that Europe this week will take decisive action the odds will continue to favor sterling for further gains.

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

USD/CHF Forecast Dec. 06, 2011, Fundamental Analysis

The USD/CHF started the week with a tight movement with a slight downside bias as the franc did not extend heavy gains versus the dollar as the risk appetite improved and investors head to riskier and higher yielding assets which left the pair little support to rally.

The franc is not a favored this period, it is weakening inline with risk assets against a strong greenback yet doesn’t rally in the opposite direction as the SNB’s readiness and willingness to take action against the gains have depressed its appeal as a risky asset and also devalued its haven status.

Surely the sentiment was in better shape with the start of the week after Italy announced a new austerity package and Merkel and Sarkozy agreed on a plan for tighter fiscal integration to prevent the crisis from returning in the future and prepare the framework now for more action to end the crisis. Thos actions supported the overall market sentiment and that kept the general bias in the market against the dollar.

On Tuesday more volatility is expected for the pair the main event will be the Swiss inflation data as further signs of deflation will be the trigger to markets to start pricing a new move from the SNB and can further weaken the franc.

As of 08:15 GMT, the Swiss economy will release CPI for Nov. where the reading is predicted to record -0.4% from the prior -0.1% on the year while rise to 0.0% from the previous -0.1% on the monthly basis. On the other hand, the U.S. has no releases.

EUR/CHF Forecast Dec. 06, 2011, Fundamental Analysis

The EUR/CHF started the week with upside bias as the risk appetite started to gradually return to the market with the announced austerity package from Italy and Merkel and Sarkozy’s agreement on a plan to stem the crisis.

We can see investors hopeful that Europe this week will present new and expanded measures that are strong enough to contain the crisis and expecting much from the ECB and also the EU leaders. This sentiment supported the euro especially with eyes ahead at the CPI from Switzerland on Tuesday and fears of rising deflation threats that might trigger a new SNB move to weaken its currency.

On Tuesday the main event will be the Swiss inflation data as further signs of deflation will be the trigger to markets to start pricing a new move from the SNB and can further weaken the franc.

As of 08:15 GMT, the Swiss economy will release CPI for Nov. where the reading is predicted to record -0.4% from the prior -0.1% on the year while rise to 0.0% from the previous -0.1% on the monthly basis. On the other hand, the U.S. has no releases.

The euro zone will start the session at 10:00 GMT with the GDP figures for the third quarter in a preliminary reading, where the quarterly and annual seasonally adjusted indexes could have lingered at 0.2% and 1.4% respectively, noting that the Household Consumption index previous reading was 0.2% drop, while the Gross Fixed Capital was at 0.2%, in the time Government Expenditures dropped by 0.2% previously.

Germany will join the session at 11:00 GMT with the Factory Orders index for October, where the annual non-seasonally adjusted index could have expanded by 1.8% compared with the previous expansion of 2.4%, while the monthly seasonally adjusted index is predicted to expand by 1.0% from the previous drop of 4.3%.

EUR/USD Forecast Dec. 06, 2011, Fundamental Analysis

The EUR/USD started an upbeat week on Monday with the eyes all concentrated on what lays ahead in the week from the ECB and EU summit which are both expected to deliver good outcomes and support to stem the crisis where the new austerity package from Italy and Merkel and Sakozy’s agreement on a new plan bolstered the confidence.

The week started after the Italian government approved a 30 billion euro austerity and growth package and Monti on Monday presented the package to both houses of Parliament for approval which supported the sentiment that Italy is doing its homework to escape the crisis that sent its borrowing costs to records high.

As for Merkel and Sarkozy they said they have reached agreement on the plan to help end the crisis and on the fiscal integration that is hoped to be for all the EU and still open to be for the euro area which will see strict oversight over the breach of fiscal rules in the Stability and Growth Pact which they will present to the European Commission President this week and they will surely address the EU with it in Brussels.

Hopes that Europe is moving towards bigger steps to stem the crisis and the use of greater tools like the IMF this week is helping ease the tension and supporting the return of the risk appetite in the market. We still expect this sentiment to pickup pace this week and gains to be seen still for the euro unless they disappoint again which will surely trigger a massive selloff to the end of the week.

As for the data on Tuesday, the euro zone will start the session at 10:00 GMT with the GDP figures for the third quarter in a preliminary reading, where the quarterly and annual seasonally adjusted indexes could have lingered at 0.2% and 1.4% respectively, noting that the Household Consumption index previous reading was 0.2% drop, while the Gross Fixed Capital was at 0.2%, in the time Government Expenditures dropped by 0.2% previously.

Germany will join the session at 11:00 GMT with the Factory Orders index for October, where the annual non-seasonally adjusted index could have expanded by 1.8% compared with the previous expansion of 2.4%, while the monthly seasonally adjusted index is predicted to expand by 1.0% from the previous drop of 4.3%.

NZD/USD Forecast Dec. 06, 2011, Fundamental Analysis

The NZD/USD pair was little changed with the beginning of the week, as it traded near its highest level in two weeks after the US dollar dropped against most of its major counterparts last week.

The federal currency lost ground against other major last week due to the improved risk appetite which increased demand for higher-yielding currencies, where the U.S. unemployment rate dropped unexpectedly during November to 8.6% supporting the confidence in the market.

As for the EU debt crisis update, the new Italian prime minister announced a plan to cut the ongoing nation’s debt which also uplifted hopes as investors’ confidence is rising on hopes that the EU summit this week will deliver strong measures to contain the crisis.

The Italian plan in addition to the cheerful U.S. data helped risky assets and accordingly supporting equities and commodities alongside the New Zealand dollar.

Both economies will not release any fundamentals on Tuesday, where the pair’s movements will depend on the market sentiment.

AUD/USD Forecast Dec. 06, 2011, Fundamental Analysis

The AUD/USD pair traded in a narrow range early Monday after the pair hit its highest level in almost three weeks, as the US dollar lost ground against most of its major counterparts.

The Australian dollar advanced as a high-yielding currency against the greenback, after the cheerful news regarding the U.S. unemployment rate which came better than expectations and dropped to 8.6%.

The American data helped the risk appetite to dominate the market and reduced demand for safe haven currencies such as the US dollar. On the other hand, the new Italian plan to cut the nation’s debt increased confidence in the financial market.

On Tuesday, the Australian economy will issue the Current Account for the third quarter, where it’s expected to show a narrowing deficit of A$5600 million compare to the previous deficit of A$7419 million.

At 03:30 GMT, the Reserve Bank of Australia will announced the interest rate decision, where it’s expected that the central bank will keep the rate steady at 4.50%.