Credit markets remained tight around the world this week but took a back seat to commodity prices and continued economic turmoil. The prices of oil and gold touched psychological highs then dropped as continued discouraging U.S. fundamental data sparked worries of global economic slowing, hurting primarily the export currencies. Although interest rates remain a major concern to forex traders, global growth, or the lack of it, rather than the individual woes of local economies, has become a greater one.

The Australian dollar gained 11% against its U.S. counterpart in 2007, but lost 8.5% against the Japanese yen in the second half as investors cut carry trades. For most of the forex trading week, the AUD/USD was again rangebound, however it dropped precipitately on Friday and that is the current trend. Daily pivot point is 0.8746; initial resistance is 0.8793 followed by 0.8884; initial support is 0.8655 followed by 0.8608.

U.S. labor data (non-farm payroll and jobless claims) indicate manufacturing and construction sectors are slipping but service employment remains strong. The forex trading market this week priced in the rising odds of the FOMC lowering interest rates by a full 0.5 bps (66%) at the January meeting rather than the previously expected 0.25 bps (34%).

Economic growth in the Eurozone continues slowing, but inflation remains the chief ECB worry going into their Thursday meeting. The ECB is expected to keep rates steady but to follow the meeting with the usual hawkish rhetoric bemoaning rising inflation. The chart shows congestion for the week with a few spikes through 1.4800 late Friday. Daily pivot point is 1.4757; initial resistance is 1.4819 followed by 1.4886; initial support is 1.4690 followed by 1.4628.

With the housing downturn, tighter credit conditions overall, and slowing economic growth in the U.K., it is widely expected the BoE will again trim interest rates. The question remains as whether the cut will come on Thursday’s meeting or the one scheduled for February. Forex traders are advised to keep a finger on the trigger in anticipation of that announcement. On all charts but most visible on the hourly, GBP/USD consolidated following Monday’s sharp drop. Daily pivot point is 1.9746; initial resistance is 1.9820 followed by 1.9924; initial support is 1.9642 followed by 1.9568.

The Swiss franc appreciated against USD and EUR on risk aversion and the unexpectedly accelerating rate of Swiss inflation, which may see the spread between interest rates narrow in 2008. Pullbacks on the hourly chart seem more profit taking than true shifts in the trend. Daily pivot point is 1.1081; initial resistance is 1.1144 followed by 1.1225; initial support is 1.1000 followed by 1.0937.

JPY gained against all 16 of the majors, including more than three percent against USD, EUR, and AUD as investors again unwound carry trades on rising risk aversion. Best seen on the hourly chart, USD/JPY consolidated following Wednesday’s drop. Daily pivot point is 108.64; initial resistance is 109.40 followed by 110.34; initial support is 107.70 followed by 106.94.

Canada is starting to feel the pinch from the U.S. slowdown. Because 80% of Canada’s exports head due south, the two economies are deeply entwined, and softer U.S. demand forced CAD to the poorer side of parity. Forex market consensus is that the Loonie’s rally against USD has ended. On Friday in particular the climb was steep. Daily pivot point is 0.9962; initial resistance is 1.0084 followed by 1.0155; initial support is 0.9891 followed by 0.9769.