US fiscal cliff talks to resume this week

Since October, the Japanese Yen has attracted attention amongst the majors saw the largest losses so far for the month of November. Throughout last week even the Euro proved resilient despite the No-Deal on Greece anemic EZ PMIs, and further disagreement over the EU budget.

EURO:

Last week a Spanish short-term debt auction went well, with yields remaining contained and demand strengthening when compared to a similar debt auction conducted a month ago.

PMI data issued last week - in-themselves a health check of the manufacturing and services sector - for the Euro zone remained in contraction with readings coming out below 50. However on the positive side actual figures proved to be better than originally expected.

From Germany, the final GDP being confirmed at 0.4% for the 3rd quarter, as well as the IFO survey for business climate, led to expectations moving higher, beating both previous and expected readings.

The EUR/USD was higher last week, as the pair managed to log five consecutive winning days and from open to close garnered 1.82 percent gains.

The Euro however took the lead over a weaker dollar amid investor anticipation that the "troika" would give its clearance on Monday 26^th November to the release of the next dose of aid for Greece.

The EUR/USD upside could push it into the region of 1.0366/1.3155, if Greece gets the green light. However watch out, as with most of the outcome priced into the support for the euro, the euphoria is not expected to be very long lasting.

JPY:

The JPY got thumbs down as risk appetite made a bit of a comeback lately. At the time of writing, the JPY shed an average 3% across all of the majors - so far the largest loser in the group.

Risk sentiment was not the only factor pushing the downturn however, as upcoming elections in Japan stoked speculation of a change in administration and more pressure for the BoJ to put in more stimulus to meet (if not to raise) the current inflation target of 1% pushed the JPY to start to sell off.

USD:

Throughout last week, overall home sales data for the month of October were surprisingly positively higher, and weekly jobless claims ticked lower as the effects of Storm Sandy started to fade. However the figures remained clouded by the effects of this super storm.

US PMI manufacturing data for the current month came out stronger than expected, and most importantly still in growth territory.

The US's fiscal cliff issues were put on the back burner as the US kick-started its holiday season with Thanksgiving festivities, and the day after US consumers rushed to the stores for the best pre-season deals on black Friday. This week however we expect the concerns to make a comeback as scheduled talks resume again.

Ahead of this mini-break we were left with a good degree of optimism looking forward, with US President Barack Obama raising hopes that a deal with congress could be reached as early as December - not that there is much choice really given the effects of the fiscal cliff will be felt from the first day of 2013.

The US Dollar was similarly weaker across most of the majors, but the gains seen against the JPY were quite interesting.

Daily moving averages for the USD/JPY are still in bullish set up, but RSI may be in for some correction after hitting overbought on the daily charts.

The USD/JPY hit 7 ½ month highs at 82.83 throughout last week, yet it looks like the currency pair should find significant resistance in the region of 83.20 - as this level is delineated by a bearish trend line that has bound price moves higher since April 2011.

The USD/JPY is trading in the range of 81.92-82.62 at the time of writing. It seems that for the current week we could expect a move lower to 81.39/80.36 unless we manage to make it above the 83.20. Above 83.20 the next resistance level is seen at 83.86.

GOLD:

The price for gold has remained contained between $1714.44 and $1754.45 throughout last week.

While forming a bullish trend for the month of November, it seems that price action is still awaiting momentum.

If prices increase resistance should be expected in the region of $1761.91-$1771.25, while if price heads south support is expected in the region of $1718.99 - $1735.78.

The author is a Senior Market Analyst on RTFX Ltd Trading Floor.