Ecofin to boost EU bailout fund

Eurozone finance ministers are set to meet Friday in Copenhagen and they will probably decide to run the €500 billion permanent European Stability Mechanism (ESM) in parallel with the temporary €200 billion (EFSF). But additionally, they will allow €240 billion unused funds to remain available until mid-2013, to lift the ceiling to 940 billion for one year, in an effort to contain the debt crisis.
EUR/USD
Range: 1.3307 – 1.3342
Support: 1.3300
Resistance: 1.3335

Euro-dollar closed in NY at 1.3323 after the rate had recovered from session lows of 1.3277 to 1.3330. The rate edged its way back to retest that late NY recovery high but the move met headwind supply linked to euro-yen sales which restricted the recovery move to 1.3332. The rate drifted off highs, the move down led by further sales of euro-yen as well as aussie-yen, which in turn was influenced by the dip in China equities, before meeting support at 1.3306. The rate recovered to settle between 1.3310-1.3330 ahead of the European open. Bids seen placed toward 1.3300, more between 1.3290-1.3280 with further interest noted from 1.3270 through to 1.3250. Resistance noted at 1.3330-1.3335, more at 1.3344. End month and end week EU Summit remain key influences.

GBP/USD
Range: 1.5885 – 1.5925
Support: 1.5900
Resistance: 1.5935

Cable closed in NY at 1.5890, off extended pullback lows of 1.5842, as well as finishing the session well clear of its 200-dma at 1.5851 after probing below. The rate marked lows into early Asia at 1.5885 before stepping its way higher through the balance of the session, the rate edging to an eventual session high of 1.5910 ahead of the European open. Early Europe extended this recovery to 1.5917 before momentum faded, the release of weaker than forecast Nationwide house data providing an early knock back to 1.5902 but fresh demand was waiting into the dip and take it back up to 1.5915. Offers seen placed between 1.5935-1.5945, a break to expose the 1.5964 level. A break here seen key to a revisit toward 1.6002. Support now seen toward 1.5900 ahead of 1.5885-1.5880 with the 1.5850-1.5840 area still key.

Gold
Range: 1,656.92 – 1,664.94
Support: 1,654.80
Resistance: 1,684.60

Gold prices are under pressure again in Asia slipping to recent lows of 1,658.35 from early highs of 1,665. The move seen as an extension of yesterday’s drop from 1,684.60 as the dollar strength picks up and concerns over China weigh on sentiment. Metal was also dragged lower by falling oil prices and amid talk of release of strategic reserves to combat any supply shortfalls as a result of the Iranian sanctions. Aussie-dollar’s fall this morning has added further downside pressure on the price of gold. Losses do appear to be contained however by underlying fears that the US may yet introduce more quantitative easing in the not too distant future and dips do continue to attract bargain hunters. Support today is seen at 1,654.80 and 1,642.25 with resistance at 1,684.60, 1,688 (200-dma) and 1,697.25.