With interest rate meetings across the globe this week and next, the forex trading market took a deep breath and currencies consolidated. Fears of a U.S. recession receded with the closing of the year; risk aversion declined with it and the carry trade returned.

As expected, the RBA kept rates on hold as a balance between inflationary pressures and the global credit crunch, but unexpectedly issued a new communication policy for greater future transparency. The possibility remains of credit costs rising for consumers as banks pass their own costs through. AUD/USD has been range trading since late November between 0.8894 and 0.8668. The pivot point is 0.8779, with initial resistance at 0.8818 followed by 0.8863; first support is at 0.8734 followed by 0.8695.

The U.S. dollar rose against JPY, EUR, GBP, and CAD, mainly due to higher than expected November job growth. The agreement between the U.S. Treasury and major lenders to freeze adjustable rates on certain subprime mortgages should slow further foreclosures and delinquencies; more importantly it reassured the forex trading market that some action, effective or not, was being attempted. A 25bp rate cut is most probable at next Tuesday’s FOMC meeting and further cuts are possible through early 2008; the USD could well appreciate during the next two quarters as the housing correction wears itself out.

The ECB also kept rates on hold. With inflation risks rising, they can’t do so forever; however, a rate hike amidst the current credit crisis would be foolhardy. The Swiss central bank meets next week and is also predicted to leave rates unchanged.

EUR/USD consolidated down from its record high and below its steep price channel. A technical correction down is possible on a sustained break below 1.4550. Pivot point is 1.4642, with first resistance at 1.4685 followed by 1.4716; first support is at 1.4611 followed by 1.4568.

The pound depreciated versus all 16 major currencies after the BoE cut rates 25bp with further cuts possible in 2008, based on slowing economic growth and a wobbly housing market. GBP/USD is consolidating and possibly entering a trading range. Pivot point is 2.0293, with first resistance at 2.0367 followed by 2.0419; first support is at 2.0241 followed by 2.0167.

CAD/USD fell 0.6% after the BoC also cut rates by 25bp, signaling more worry from the global financial situation, and particularly Canadian exports, than inflation. This is the lowest level for CAD/USD in 2.5 months as crude oil fell below US$90 per barrel and exports dropped to their lowest since 1998. Pivot point is 1.0068, with first resistance at 1.0130 followed by 1.0210; first support is at 0.9988 followed by 0.9926. The depreciation of CAD appears sustainable for the mid-term.

USD/JPY rose with the renewal of carry trades, climbing from 107.25 through the key 108.96 level and consolidating at 111.05. Pivot point is 111.54, with first resistance at 111.92 followed by 112.16; first support is at 111.30 followed by 110.92.

RBNZ also held rates steady based on high inflation pressures, and rate hikes remain possible in 2008 as the bank’s reading of energy costs on CPI inflation seems unrealistic. USD/NZD rose for the third straight week. Pivot point is 0.7770, with first resistance at 0.7799 followed by 0.7844; first support is at 0.7725 followed by 0.7696.