Month end fixing may end up being USD positive as banks' funding costs for USDs continue to rise. Trading in Asia was off to a rocky start with the Heng Seng down 1.80%. The economic calendar is crowded today but investors will continue to focus on the meeting of European finance ministers.
Bank funding costs are rising as lenders scramble to secure USD funding. Today's end of month trading may increase demand for USDs, especially in Japan.
The meeting of European finance ministers continues into its second day and an article in The Telegraph highlights comments by German Finance Minister Wolfgang Schauble saying European finance ministers have not agreed on the terms of the EFSF.
This afternoon in the North American session we will have the ADP jobs report and US pending home sales, along with Canadian GDP data.
The USD could continue to firm in light of a failure of the European finance ministers to come away with concrete steps to shore up Europe's finances. The EUR/USD has support at the October low of 1.3145. A break here and the pair could move to 1.0350, the 61% Fibonacci retracement of the June 2010 to May 2011 bullish trend. Resistance is found at yesterday's high of 1.3440 and the November 18th high of 1.3610. The CAD/USD found support at 1.2060 and could now test the weekly high of 1.0520.
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