USD sold on short term correction but bullish trend remains in tact

US Dollar:

The greenback continued to remain solid against most of its major counterparts yesterday despite a short term correction in both GBPUSD and EURUSD. This is expected to be short lived though as investors scale back their appetite for risk and the reserve currency may appreciate further. The economic docket remains fairly light today we are likely to see market sentiment dictate price action in the currency market. On a technical basis Cable needs to clear 1.5650 to avoid a retest of the platform base from early September at 1.5295. Daily indica¬tors are in neutral territory so we would not rule out the possibility for more of a bounce over the coming ses¬sions from where a fresh lower top will be sought out ahead of an eventual drop to challenge and break 1.5295.
Data : ABC consumer confidence, FED’s Plosser speaking

Pound:

The British Pound traded sideways overnight with the exchange rate lingering around the 1.5550 level and we see the pair reaming range bound over the coming days as market participants anticipate the Bank of England to maintain its current policy in January. However, a report by Halifax showed home prices in the U.K. slipped 1.3% in December after contracting a revised 0.2% in the month prior, and the BoE may continue to talk down the risk for inflation as the central bank expects the ongoing slack within the real economy to drag on price growth. GBP did receive a boost thanks to Prime Minister Cameron, Extolling the dangers of inflation and his confidence in the BoE comes off as a tacit support for rate hikes should the policy group go that way. Continuing problems in the EuroZone has enable GBPEUR to climb comfortably into the 1.20’s.
No Data scheduled for release.

Euro:

Interest in Europe’s financial woes immediately picked up on yesterday and gathered pace towards the end of the day. Reuters quoted an unnamed but senior Euro Zone official who suggested Germany and France among others have been pressuring Portugal to seek financial assistance from the EU and IMF before the govern¬ment’s funding situation grew critical. Officials from Germany, France and Spain all denied that their fellow member was in such straights and that they were pushing assistance. This should seem familiar as it was the same general storyline we followed with Greece and then Ireland. With Portugal set to auction debt on Wednes¬day; even the ECB’s reported buying will not materially help. What would help? How about another major source of demand from outside Europe? Rate wise EURUSD recovered slightly from a 5 month low of 1.2873 but remains well offered and GBPEUR broke through and held above 1.20
DATA : EUR Bank of France Business sentiment (DEC)

General:

Japan to buy bonds to help Europe through debt crisis. Japanese Finance Minister Yoshihiko Noda said Tues-day that the government would purchase Eurozone bonds to help the region as it struggles with a debt crisis among some of its members. Noda said Japan would use its foreign-currency reserves to buy more than 20 per cent of the bonds to be issued this month by the European Financial Stability Facility, the Eurozone's sovereign rescue fund, which aims to help debt-ridden European governments.

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