EURO Falls On Bailout Fund Increase Debate

*U.S. Dollar* Trading (USD) risk was off in Asia as China stocks lost
3% on tightening fears allowing the USD to get a bid tone. With the US
away Europe dictated action with the Euro under pressure but most
other pairs found support. In US stocks, closed for Bank Holiday for
Martin Luther King Day. Looking ahead, November Long Term TIC Flows
forecast at 40bn vs. 27bn previously. Also ahead, Bank of Canada rate
decision forecast at 1%.

The *Euro* (EUR) the market is focusing on a stream of comments from
EU officials on the prospect of European Stabilization fund being
expanded. Germany is reluctant to expand the fund and this is causing
tension with other members so far. EUR/USD traded with a low of 1.3243
and a high of 1.3382 before closing at 1.3280. Looking ahead, German
January Economic Sentiment forecast at 6.8 vs. 4.3 previously.

The *Japanese Yen* (JPY) was quiet falling back from Y83 after failing
to gain a foothold above the level. Support is found on dips with Yen
crosses strong over the last week. Overall the USDJPY traded with a
low of 82.34 and a high of 83.03 before closing the day around 82.65
in the New York session.

The *Sterling* (GBP) was strong testing above 1.5900 as EUR/GBP was
sold off and GBP/JPY extended gains. Talk that the BOE might have to
raise rates to fight stubborn inflation supported the market. Overall
the GBP/USD traded with a low of 1.5833 and a high of 1.5957 before
closing the day at 1.5915 in the New York session. December CPI is
forecast at 0.75 vs. 0.4% previously m/m.

The *Australian Dollar* (AUD) dipped in Asia on Chinese concerns
before recovering nicely in Europe on stronger stock markets. AUD/JPY
is finding support under Y82 but upside is limited while USD/JPY
struggles. Overall the AUD/USD traded with a low of 0.9861 and a high
of 0.9971 before closing the US session at 0.9930.

*Oil & Gold* (XAU) was extremely contained staying close to the $1360
level throughout the trading day with US traders away. Overall trading
with a low of USD$1356 and high of USD $1366 before ending the New
York session at USD$1362 an ounce. Oil fell back slightly in light
trading. WTI Oil Closed -$0.40 at $91.10 a barrel.
Source: ActionForex.Com