• Dollar Climbs and S&P 500 Slides on Extremely Light Volume
• Euro Traders Await the Economic Damage of a Financial Crisis
• British Pound Traders Expect High CPI, Gauge Trouble Ahead of BoE Report
• Japanese Yen Shows Asian Session Volatility: Is this Intervention?
• Australian Dollar Can’t Sustain its Bullish Reaction to RBA Minutes
• Swiss Franc: Speculation of a Raised EURCHF Floor Circulates Once Again
• Gold Steadies as Risk Retrenches, Volume Contracts

Dollar Climbs and S&P 500 Slides on Extremely Light Volume

The dollar advance to start the new trading week; but it did so under dubious conditions. Considering the currency’s place in the broader capital markets and underlying risk trends; its performance seems to make sense. Capital market and risk trends were notably weaker with the S&P 500 down approximately one percent while the Australian dollar dropped against many of its safe haven counterparts. Under these fundamental headwinds, safe haven demand picks up. That said, the greenback is a unique harbor for capital in that is seen as specifically appealing when liquidity is under particular strain. This is encouraged and confirmed under two particular circumstances: when the risk aversion move is market-wide and when the shift in capital is particularly heavy.

As for the prevalence of the risk aversion move, it wasn’t difficult to see the push was market-wide. In the capital markets, European and US equities slid; speculative commodities (like US oil and copper) fell; high-yield corporate bonds eased; and ‘risk-free’ government bonds showed an inflow of investor interest. The FX markets reflected the same general push with the high-yielding and fundamentally-troubled currencies giving way tothe US dollar, Japanese yen and Swiss franc. If correlation itself were enough a sign of a strong sentiment move; this would be a clear signal. Yet there is another aspect to this equation: conviction. And, when we try to tap the drive behind this move; we see that there was something lacking. Looking beyond the measured price moves of the various risk aversion shifts, we can look into critical volume figures to confirm something is amiss. Specifically, the S&P 500 Index (our favored sentiment barometer) reported turnover of only 533 million shares. This is the weakest level of activity for this defining speculative gauge (outside of holiday periods) in at least a decade. That is suspicious.

Light volume in a risk aversion move does not mean the nascent trend is destined to fail; but it does raise the requirements for participation to jump start follow through. As such, we are left to look for catalysts for market optimism or pessimism. An argument can be made for factory-level inflation and retail consumption figures due in the upcoming session; but that would be a stretch as we are well aware of the general trend the US economy is on. Far more critical as catalysts are core Euro Zone GDP figures due in the upcoming European session. Feeding directly into persistent fears of a global financial crisis that is spreading out from the troubled region; this figures can tap into true uncertainty.

Related:Discuss the Dollar in the DailyFX Forum,John’sVideo:GBPUSD, EURJPY and GBPJPY Face Heavy Event Risk at Verge of Breakout

Euro Traders Await the Economic Damage of a Financial Crisis

With risk aversion on the lam and the data out of the Euro region notably off-kilter; there is no surprise that the shared currency was weaker on the day. Then again, given the hesitance in the sentiment downgrade and the ‘relief rallies’ the euro is prone to; it is also easy to interpret the reluctance to jump start a heavy bear trend (something the currency was exceptionally exposed to not long ago). With a bullish gap to start the week, the euro was on a buoyant footing as market participants breathed a sigh of relief with Italy transitioned to Mario Monti as the head of a new government. A similar, mild boost was found in the smaller-than-expected in Portuguese 3Q GDP (a 0.4 percent drop). Yet, the negatives in these two events were obvious. Furthermore, we learned that an Italian five-year bond auction met its worst yield since 1997 while default risk on Spain and France hit new record highs. The risk is there; and it is waiting for the next catalyst. Perhaps theupcoming GDP figures from France, German and the Euro Zone will do it. We are aware of the region’s financial troubles; but dragging the core down would be clear escalation.

British Pound Traders Expect High CPI, Gauge Trouble Ahead of BoE Report

The sterling was under pressure to start the week as it aligned itself to its European and risk-related roots. We will see the currency make a greater effort to drive its own future in theupcoming 48 hours though. While Wednesday’s BoE Quarterly Inflation report is top event risk; the CPI numbers due in the next London trading session will have significant pull of their own. If the UK economy is heading into an economic slump (the EC expects as much); persistent price pressures at an expected 5.1 percent clip spells real trouble for monetary policy officials.

Japanese Yen Shows Asian Session Volatility: Is this Intervention?

There were a few, sharp and short lived moves for the Japanese yen in the early Asian session this morning. Considering the push was bearish for the funding currency; it is natural that speculation of intervention would factor in. While we are highly skeptical about the effectiveness of intervention against larger market forces; something this short-lived would be unusual. This is more likely a component of the thin markets.

Australian Dollar Can’t Sustain its Bullish Reaction to RBA Minutes

The RBA minutes ultimately delivered few surprises. The dovish shift in tone fits what we have expected from the central bank nicely. However, with the market looking for a reason to move; you will see that points that can be interpreted by speculators will be. As such, the minutes suggestion that there was a case to have held rates earlier this month suggested a policy to hold going forward. Yet is a slow pace surprising?

Swiss Franc: Speculation of a Raised EURCHF Floor Circulates Once Again

Speculation runs rampant on days when markets are generally balanced and participation is particularly light. As such, there was notable reaction to rumors that the SNB was preparing to lift its floor from 1.20 to 1.25. Realistically, this would relatively good timing for the policy group as they are close to this next threshold; but this is ultimately just conjecture – and it isn’t new conjecture at that.

Gold Steadies as Risk Retrenches, Volume Contracts

With risk trends pulling back and fear of liquidity evaporating light; we would expect gold to gain ground over most of its counterparts. That wasn’t the case on Monday however. With trading light and the dollar on the advance; the precious metal would succumb to the vapid market conditions. Volume in the futures market hit multi-month lows, though; so don’t expect this to be a trend until we see conviction.

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**For a full list of upcoming event risk and past releases, gotowww.dailyfx.com/calendar

ECONOMIC DATA

Next 24 Hours

GMT	Currency	Release	Survey	Previous	Comments
0:30	AUD	New Motor Vehicle Sales (MoM) (OCT)		-1.5%	Purchases of heavy goods will gauge consumer confidence
0:30	AUD	New Motor Vehicle Sales (YoY) (OCT)		1.3%
4:00	JPY	Tokyo Condominium Sales (YoY) (OCT)		16.7%	Domestic spending push buying
6:30	EUR	French GDP (QoQ) (Q3 P)	0.4%	0.0%	Year-over-year numbers expected to be weaker, will drag on hopes
6:30	EUR	French GDP (YoY) (Q3 P)	1.6%	1.7%
7:00	EUR	German GDP n.s.a. (YoY) (Q3 P)	2.4%	2.8%	First major data of European session: German YoY GDP expected lower with other countries, may drive sentiment for week
7:00	EUR	German GDP w.d.a. (YoY) (Q3 P)	2.5%	2.8%
7:00	EUR	German GDP s.a. (QoQ) (Q3 P)	0.5%	0.1%
7:45	EUR	French Wages (QoQ) (Q3 P)		0.6%	French labor expected to slightly improve, though may not move markets as much as GDP data
7:45	EUR	French Non-Farm Payrolls (QoQ) (Q3 P)	0.3%	0.2%
9:00	EUR	Italian Trade Balance (Total) (euros) (SEP)		-3152M	Italian trade balance could take back-seat as politics in focus
9:00	EUR	Italian Trade Balance EU (euros) (SEP)		-766M
9:30	GBP	CPI (MoM) (OCT)	0.2%	0.6%	British price data expected to remain high, though Bank of England continues to remain dovish on rates as it resists stepping on recovery
9:30	GBP	CPI (YoY) (OCT)	5.1%	5.2%
9:30	GBP	Retail Price Index (MoM) (OCT)	0.1%	0.8%
9:30	GBP	Retail Price Index (YoY) (OCT)	5.5%	5.6%
9:30	GBP	Retail Price Index Ex Mort Int (YoY) (OCT)	5.7%	5.7%
9:30	GBP	Core CPI (YoY) (OCT)	3.2%	3.3%
9:30	GBP	Retail Price Index (OCT)	238.3	237.9
10:00	EUR	Euro-Zone GDP s.a. (QoQ) (Q3 A)	0.2%	0.2%	Also expected to fall in line with major economies’ GDP lower
10:00	EUR	Euro-Zone GDP s.a. (YoY) (Q3 A)	1.4%	1.6%
10:00	EUR	German ZEW Survey (Current Situation) (NOV)	32	38.4	ZEW surveys sentiment expected to trend lower once again as lower productivity mixes with debt crisis
10:00	EUR	Eurzone ZEW Survey (Eco Sentiment) (NOV)	-55.3	-51.2
10:00	EUR	German ZEW Survey (Eco Sentiment) (NOV)	-52.5	-48.3
10:00	EUR	Euro-Zone Trade Balance s.a. (euros) (SEP)	-1.5B	-1.0B	Overall trade balance contributing to sentiment drag
10:00	EUR	Euro-Zone Trade Balance (euros) (SEP)	2.0B	-3.4B
13:30	CAD	Manufacturing Sales (MoM) (SEP)	1.3%	1.4%	Sales to US may slow
13:30	USD	PPI (MoM) (OCT)	-0.1%	0.8%	Lower producer prices may sustain Fed’s low rate promise until 2013; QE may not be called in with this report
13:30	USD	PPI Ex Food & Energy (MoM) (OCT)	0.1%	0.2%
13:30	USD	PPI (YoY) (OCT)	6.3%	6.9%
13:30	USD	PPI Ex Food & Energy (YoY) (OCT)	2.9%	2.5%
13:30	USD	Advance Retail Sales (OCT)	0.3%	1.1%	Sluggish retail sales could drag on market as consumer spending slowing into winter months
13:30	USD	Retail Sales Less Autos (OCT)	0.2%	0.6%
13:30	USD	Retail Sales Ex Auto & Gas (OCT)	0.2%	0.5%
13:30	USD	Empire Manufacturing (NOV)	-2.20	-8.48	Eastern industries may recovery
15:00	USD	Business Inventories (SEP)	0.1%	0.5%	Investment spending slowing
23:30	AUD	Westpac Leading Index (MoM) (SEP)		0.8%	Leading index treading water
23:50	JPY	Housing Loans (YoY) (Q3)		2.4%	Loans rising despite low credit

GMT	Currency	Upcoming Events & Speeches
0:30	AUD	Reserve Bank's Board November Minutes
15:05	USD	Fed's Williams Speaks in Scottsdale

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE - 18:00 GMT

Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist 2	1.4250	1.6445	81.50	0.9300	1.0675	1.1080	0.9020	112.00	131.00
Resist 1	1.4000	1.6100	79.50	0.9150	1.0675	1.0770	0.8750	109.35	128.30
Spot	1.3637	1.5909	77.12	0.9068	1.0167	1.0194	0.7790	105.16	122.68
Support 1	1.3500	1.5900	77.50	0.8500	0.9950	1.0100	0.7500	105.00	122.35
Support 2	1.3350	1.5700	75.50	0.7800	0.9750	1.0000	0.6850	102.00	116.00

CLASSIC SUPPORT AND RESISTANCE–EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency	USD/MXN	USD/TRY	USD/ZAR	USD/HKD	USD/SGD		Currency	USD/SEK	USD/DKK	USD/NOK
Resist 2	16.5000	2.0000	8.5800	7.8165	1.3650		Resist 2	7.5800	5.6625	6.1150
Resist 1	14.3200	1.9000	8.1025	7.8075	1.3250		Resist 1	6.5175	5.3100	5.7075
Spot	13.5160	1.7845	8.0084	7.7809	1.2897		Spot	6.6843	5.4579	5.7155
Support 1	12.6000	1.6500	6.5575	7.7490	1.2000		Support 1	6.0800	5.1050	5.3040
Support 2	11.5200	1.5725	6.4295	7.7450	1.1800		Support 2	5.8085	4.9115	4.9410

INTRA-DAY PIVOT POINTS 18:00 GMT

Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist 2	1.3903	1.6177	77.55	0.9172	1.0263	1.0424	0.7995	107.53	125.15
Resist 1	1.3770	1.6043	77.33	0.9120	1.0215	1.0309	0.7892	106.34	123.92
Pivot	1.3681	1.5962	77.08	0.9041	1.0147	1.0235	0.7827	105.56	123.13
Support 1	1.3548	1.5828	76.86	0.8989	1.0099	1.0120	0.7724	104.37	121.89
Support 2	1.3459	1.5747	76.61	0.8910	1.0031	1.0046	0.7659	103.59	121.10

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist. 3	1.3859	1.6079	77.92	0.9226	1.0305	1.0379	0.7932	106.97	124.38
Resist. 2	1.3803	1.6036	77.72	0.9187	1.0270	1.0333	0.7897	106.52	123.96
Resist. 1	1.3748	1.5994	77.52	0.9147	1.0236	1.0286	0.7861	106.06	123.53
Spot	1.3637	1.5909	77.12	0.9068	1.0167	1.0194	0.7790	105.16	122.68
Support 1	1.3526	1.5824	76.72	0.8989	1.0098	1.0102	0.7719	104.26	121.84
Support 2	1.3471	1.5782	76.52	0.8949	1.0064	1.0055	0.7683	103.80	121.41
Support 3	1.3415	1.5739	76.32	0.8910	1.0029	1.0009	0.7648	103.35	120.99

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---Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com

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