This week, coordinated central bank auctions and currency injections poured liquidity into the markets and eased pressure on commercial banks. Despite more sub-prime mortgage disasters, this week saw the return of the carry trade as investors’ fears of global recession waned.

The Australian dollar was the  second best performance among the most actively traded currencies. On Monday AUD/USD began range-trading between 0.8646 and 0.8553, but Friday it broke out and rose to 0.8696 before closing at 0.8670. Pivot point is at 0.8648; initial support is at 0.8600 followed by 0.8529; initial resistance is at 0.8719 followed by 0.8767.

U.S. consumer spending, approximately 70% of the world’s largest economy, rebounded in November but so did inflation, limiting the amount the FOMC can lower interest rates in 2008. The U.S. housing inventory is slowly decreasing, and fewer new home starts means the number of available houses is coming back into line with consumer demand, further lowering the chances of recession as long as job and income growth remain steady.

The Eurozone maintains an uneasy balance between rising inflation pressure and the global credit crunch. With German business confidence numbers sagging, some easing of interest rates may be warranted in the first half of 2008. The EUR/USD sank this week by approximately 100 pips with no real price action. Pivot point is at 1.4361; initial support is at 1.4312 followed by 1.4267; initial resistance is at 1.4406 followed by 1.4455.

The pound sterling has depreciated 10% versus EUR during most of 2007 and lost 1.7% this week alone against USD as the U.K. housing market continues to slide and further interest rate reductions become more likely. The MPC minutes released this week showed December’s rate cut was unanimous and could have been larger. GBP/USD fell below 2.00 for the first time in three months, and this softening is likely to continue. Pivot point is at 1.9840; initial support is at 1.9788 followed by 1.9757; initial resistance is at 1.9871 followed by 1.9923.

The Canadian dollar was the best performer this week amongst the “majors” after better than expected GDP growth and higher retail sales in October indicated the Canadian economy perhaps is not being endangered by the slowdown to its south. This CAD strength was helped by rising crude oil futures prices, which pushed it back above parity with USD. Pivot point is at 0.9950; initial support is at 0.9883 followed by 0.9842; initial resistance is at 0.9991 followed by 1.0058.

The Japanese yen fell against all 16 of the most actively traded currencies as investors sold the yen to purchase higher-yielding assets in countries with higher interest rates. USD/JPY broke through resistance at 113.63 on Friday with strong momentum after an otherwise lacklustre week. Pivot point is at 113.77; initial support is at 113.36 followed by 112.52; initial resistance is at 114.61 followed by 115.02.

The New Zealand dollar strengthened after higher than expected economic growth, however, gains were slight and did not recover the loss of the previous week. Pivot point is at 0.7634; initial support is at 0.7593 followed by 0.7550; initial resistance is at 0.7677 followed by 0.7718.