This week, forex trading suffered returning pessimism regarding the global credit crunch. The U.S. dollar continued to soften amidst huge assets write downs from major international banks; rumors of Barclays being the next victim prompted a temporary suspension of shares trading to ease volatility. Rising risk aversion again made carry trades seem rather heavy and speculators moved to safe harbors such as gold, the Swiss franc, and U.S. Treasury bills, giving the USD some support against the commodity currencies of Australia, New Zealand, and Canada.

The AUD/USD consolidated after climbing steadily since mid-August atop soaring gold prices, and despite agricultural losses from the worst draught in 200 years and repeated safe-harbor migrations. The daily and H4 charts show uncertainty with price action between 0.9378 and 0.9126, where the pair closed on Friday 9 November. This last could be considered either the resistance point for continued range trading, or the breakout point for a slide; with low trading volumes throughout the week and RSI at 33, there are signs of reversing or at least slowing momentum. Monday begins an interesting week for this pair.

Calls to support the USD arose from the Eurozone, in particular from France and Italy, but the forex trading market did not listen and the EUR/USD consolidated on H4 and hourly charts off a record high of 1.4752, closing at 1.4669, with the long-term target remaining at 1.5000. Initial support is at 1.4624 followed by 1.4574; resistance at 1.4714 followed by 1.4754.

Canadian trade numbers showed troubled exports; the postal system remained backlogged delivering parcels ordered from the U.S. by Canadian consumers; and Finance Minister Flaherty is “concerned” with the surging CAD in overall forex trading. The combination gave support to the CAD/USD when nothing else offered, and after a nine-week slide the pair rebounded from 0.9056 to close at 0.9426, 75 pips higher than where it began the week: another USD pair consolidating in a rough channel, this one between 0.9254 and its Friday close.

The same pattern holds between the pound sterling and the USD, this one fueled by the interest rate gap maintaining upward pressure on the currency pair. Daily charts continue to show a rising price channel despite the 200-pip drop from 2.1108 to 2.0909 on Friday due to the Barclays scare, perhaps best appreciated on the hourly chart.

The EUR/GBP continues to range trade, closing at 0.7015 on Friday which is the top of the channel and a significant resistance level. Initial support is at 0.6948 followed by 0.6920 and 0.6896. Any sustained break above 0.7020 could signal a climb to 0.7100, not reached since 2004.

Generally the Swiss franc and Japanese yen, as funding currencies, tend to correlate their advances and retreats. Both advanced significantly this week, particularly against the USD, and remain the currencies to watch for the coming forex trading week. The USD/CHF, with strong Swiss fundamentals and reputation as a safe harbor currency, has broken below 1.1290, a significant support level respected in 2004; however, this pair also showed consolidation on the hourly chart, retreating from a low of 1.1187 to close at 1.1231. The record low for this pair is 1.1115, set in 1995.