European & US Summary: US Manufactuing Pulls Dollar Off its Lows

	European & US Summary: US Manufactuing Pulls Dollar Off its Lows by Ashraf Laidi （首席分析师 --- www.forexnews.com) The dollar edged higher during US trade in response to strong reports on US manufacturing sentiment and construction spending. The dollar's positive reaction was partly facilitated by the 52-week high rally in US stock indices and by the lingering bearishness prevailing in the currency, which triggered buying on the dips. But the persistent strength of Gold prices above the $400 per ounce level suggests that the dollar's woes are far from over. The Institute for Supply Management's factory index shot up to 62.8 in November, posting its highest level since December 1983, from 57 in October. The expansion story in manufacturing is being further substantiated by the breadth of survey's improvement. Most notably is the employment index, which broke above the 50 level for the first time in 37 months. The 50 level denotes the boundary between expansion and contraction in the sector. New orders soared to 73.7 from 57 while the prices paid index shot up to 64 from 58.5 due to reported increases in energy costs. In more stunning economic news from the US, spending on residential construction soared 0.9% to $922 billion in October, setting a record high for the fourth straight month. EURUSD Eases off New High after US Data The euro was finally dragged lower by the dollar on overwhelmingly strong US data. The currency hit a new all time high at $1.2038 during mid morning European trade thanks to improved Eurozone data and thinning trading volumes. The E-12 Purchasing Manager's Index rose to 52.2 in November from October's 51.3, posting its highest level since February 2001. ECB Chief Jean Claude Trichet stated that the ECB was pursuing a policy of strong and stable currency. He also instilled fresh hopes to the damaged growth and stability pact, indicating that it was not dead and should be neither reformed nor changed. Trichet's comments on preserving currency strength would have fuelled a fresh euro buying wave had it not been for the strong US data. Recall that the euro was also boosted last week by reports from London-based newspaper The Independent that renowned financiers George Soros and Warren Buffett were reiterating their bearish stance on the dollar. EURUSD faces preliminary resistance at 1.1990 followed by 1.2030 and 1.12070. Medium term resistance stands at $1.22 last hit on Oct 1998 high in synthetic terms(这里指的是欧元前身欧元区各成员国的货币在当时的综合相当价位）. Support starts at 1.1970 backed by 1.1935-40 and 1.1890. Cable Mimicks EURUSD For Now   （英镑 --- Cable or Sterling) Sterling's move against the dollar largely mirrored that of EURUSD in the aftermath of the US data release. After rallying nearly a full cent to fresh 5-year highs at $1.7275 on soaring British manufacturing data, sterling engaged in a full retreat towards the $1.72 figure. Despite today's release of the November PMI survey showing the best figure in 4 years at 54.5, markets expect the Bank of England to hold rates unchanged at 4.75% this week. But the inevitability of another looming rate hike combined with continued dollar gloom should continued upward momentum for sterling. Cable sees interim resistance at $1.7255-60 followed by 1.7270 and 1.7320. Key pressure seen at 1.7355-60-the Oct 1998 high. Support seen at 1.7130-35, backed by 1.71, 1.7060 and 1.7020. Aussie Hits 6-year high Bucking Trend AUDUSD inched to a new 6-year high, overcoming the modest rebound in the greenback. Despite the strength of the US data, traders remained largely long Aussie ahead of this week's policy Reserve Bank of Australia policy meeting, which could produce another 25-bp rate hike, lifting rates to 5.25%. Evidence of a decline in Australia's current account deficit in Q3 suggested that the strong currency was not a total drag on exports. The currency, already the year's best all-round performer, has been fueled by a widening interest rate advantage and steady growth rate. Persistent strength in gold above $400 could push up AUDUSD to 73.20 cents. Further resistance stands at 73.55-60 and 74.20. Support starts at 72.60, 72.30 and 71.90. USDJPY Ends Little Changed USDJPY joined the dollar pair rally at the release of the US data probing the 109.70 resistance but later reversed course back to the 109.30s. Unlike the other major currencies, the yen is remains capped by intervention threats from the Bank of Japan. Last week the pair pushed higher after the Ministry of Finance showed the BoJ had spent 1.6 trillion in November to sell yen for dollars. Although the data stood below the prior month's record numbers, it reaffirmed Tokyo's resolve to stand against excessive yen strength, which prompted traders to stay away from selling dollars against the Japanese currency. Resistance still established at 109.65-70-the minor trend line resistance extending from the 111.47 high to the 110.02 high. Subsequent run-up seen tempered at the 2 week high of 110.30 and 111.50. Support held at 108.40, followed by 107.85-90 and 107.45. 供参考！

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