In London the FTSE index of 100 leading shares fell 0.29% to 6,122.10 points.

In Frankfurt the DAX index of 30 leading shares shed 0.98% to 6,411.96 and in Paris the CAC 40 slumped by 0.65% to 5,389.46 points.

As European markets closed, the Dow Jones Industrial Average showed a loss of 0.22% at 12,299.24 points in New York while the Nasdaq Composite of mostly high-tech shares was down 0.09% at 2,463.75 points.

The broad Standard & Poor??™s 500 index had given up 0.16% to 1,403.83 points.

The US markets were to shut early yesterday and had been closed Thursday for the Thanksgiving holiday.

In London, banking shares fell in response to brokerage comment from Morgan Stanley expressing concern about recurrent loan problems, saying that the banks were likely to face increased costs in dealing with bad debts.

It singled out particularly Lloyds TSB and the price of stock in the bank fell by 1.25% to 554.50 pence. Stock in Barclays shed 1.07% to 692 pence.

Companies that were exposed to the falling dollar also came under pressure, and the jet-engine maker Rolls-Royce lost 0.90% to 438.75 pence.

In Frankfurt, sentiment was affected by the weakness in Tokyo, and shares in chemical group Bayer fell by 2.72% to 39.0 euros, having risen on Thursday after the group announced the sale of its chemicals subsidiary HC Starck for about 1.2bn euros ($1.56bn).

Allianz fell by 2.10% to 149.05 euros. A trade union said that the banking and insurance group would drop any job cuts until the end of 2009, having said in June that it wanted to shed 5,000 jobs in Germany. Shares in the airline Lufthansa gained 0.63% to 19.22 euros even though it had said it would maintain or slightly increase its dividend.

Shares in Paris were set back by the dollar??™s fall against the euro, which hit $1.31 in mid-day trading, the highest level since April 2005.

Brokers Aurel Leven said that the cautious attitude of investors, particularly in Germany where it contrasted with strong business sentiment, “is driven by gloomy prospects in the US and for world growth”.

Shares in airline Air France-KLM fell by 1.06% to 29.82 euros, continuing a decline begun on Thursday in response to news that the company had begun exploratory talks on a link with struggling Italian airline Alitalia.

Shares in the European aerospace group Eads fell by 0.43% to 23.25 euros owing to the weaker dollar and an announced delay in a board meeting on the launch of the A350 series airliner.

Another factor weighing on Eads was an announcement on Thursday that prosecutors have begun a probe into possible insider trading in Eads stock earlier this year.

Shares in auto group PSA Peugeot Citroen fell by 1.09% to 48.0 euros in line with general weakness in the European auto sector.

In Amsterdam, the AEX index fell by 0.69% to 484.91, the Swiss SMI dropped by 1.25% to 8,641.5, in Milan the SP/Mib was off by 0.61% at 40,614, in Madrid the Ibex-35 lost 1.37% to 14,088.1 and in Brussels the Bel-20 closed 0.28% lower at 4,183.36 points.

The dollar fell sharply here against the euro and the yen, hitting a 19-month-low against the single European currency, but analysts were uncertain as to what sparked the plunge.

The euro in late-day trade was at $1.3081 against $1.2948 late on Thursday in New York. The single currency at one point jumped to $1.3109, its best showing since April 21, 2005.

The dollar was meanwhile trading at ??115.59, its lowest reading since early September, after ??116.25 on Thursday. Some analysts suspected technical factors, such as a wave of automatic dollar selling orders when the euro broke through the $1.31 level.

Other cited concerns about prospects for the US economy, which slowed to an annual pace of 1.6% in the third quarter from 2.6% in the second and 5.6% in the first.

There is now a broad assumption on the market that US interest rates have reached their peak, 5.25%, and are not likely to rise any time soon.

At the same time, interest rates appear to be on their way up in the eurozone, where the benchmark level is expected to reach 3.50% in December and could go higher in 2007. The eurozone trend would accentuate the differential with the US rate cycle.

In addition, the deputy governor of the People??™s Bank of China, Wu Xiaoling, appeared to suggest that holding the dollar as a reserve currency might pose risks.

“The exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” he was quoted as saying in an academic paper.

Traders said his remarks contributed to a buying spree in alternative reserve currencies, principally the euro. But Julian Jessop of Capital Economics argued that there appeared to be no clear explanation for what happened to the dollar yesterday.

Meanwhile, other currencies also benefited, with the pound surging to a 23-month high of $1.9336 and the Australian dollar reaching its highest level in over six months at $0.7780.

The US currency also fell to a five-and-a-half month low against the Swiss franc of $1.2100 in intra-day trades.

The pound was being traded at $1.9308 from $1.9154 on Thursday.

On the London Bullion Market, the price of gold rose to $639.50 per ounce from $630.25 late on Thursday. ??“ AFP

By Kathy Lien, Chief Strategist of www.dailyfx.com

??? Rally in EURUSD Becomes Exhausted After Mixed US Data
??? Japanese Yen Rebounds on Firmer Data
??? Commodity Currencies Slide After Horrid Australian Trade Data

US Dollar ??“ After a week of losses, the US dollar is finally bouncing. It remains to be seen whether this move is real however because the data was not the main catalyst, instead the price action and timing of the breakdown suggests that the market was just tired of shorting dollars. The 400 point verticalization of the Euro against the dollar and the 600 point move in the British pound over the past few days tempted many traders to take profits ahead of the Fed??™s Beige Book report, which turned out to be neither dollar bullish nor dollar bearish. The various Fed districts echoed the same themes as Chairman Bernanke earlier this week. Their number one concern was the housing market and the fact that both sales and prices were falling. Even though consumer spending is picking up in the districts, they are cautiously optimistic about growth, which is no surprise given that the report was submitted on November 20th, a few days before Black Friday. In terms of inflation, they saw some moderation in prices for construction materials and energy products, but it is not enough to give the Fed a reason to move interest rates. The one piece of good news was their assessment of the labor market, which they felt still remained tight. The other pieces of economic data that was released this morning were also mixed. Even though third quarter GDP printed strongly at 2.2 percent, the core PCE, which is an inflation measure was revised down from 2.3 to 2.2 percent. New home sales dropped 3.2 percent in the month of October, but the report contained underlying strength as prices increased 1.9 percent. The housing market still remains very vulnerable and is far from stabilization. Therefore, the overall takeaway is that the market is comforted by the firmness of the GDP report, but the dollar is not out of the woods. Although a further recovery is likely, the major downtrend should still remain intact.

Euro and Swiss Franc – Comments on the Euro were the day??™s main focus as the market listened for any type of concern from ECB officials about the level of the Euro. The French Finance Minster repeated that the EUR/USD above 1.30 requires vigilance, but no one has really paid attention to his words because they came from a politician rather than a monetary official. ECB President Trichet refused to comment on the level of the currency but he did say that excess volatility was unwelcome. This caused a very mild sell-off in the currency because the central bank President stopped short of calling the move brutal. Weber made a similar comment as Trichet while ECB members Stark and Noyer refrained from commenting on the currency. The ECB is delivering one collective message, which is a tactic they are known for. Perhaps they want to make sure that the market continues to fully price in their December hike, so that there isn??™t a major spike come December 7th. Mean while there was only one piece of Eurozone economic data released today and that was French unemployment. After dropping by 50,000 in the month of September, unemployment increased by 5,000 in October, leaving the unemployment rate unchanged at 8.8 percent. There is a lot more data due for release tomorrow including German unemployment, French consumer confidence, French PPI and Eurozone GDP. Should the data come out weak, the sell-off in the Euro may not be as sedate as it was today. Over in Switzerland, the tiny country reported a much weaker KoF leading indicator report. The index fell to the lowest level since February 2006 which comes in contrast to the rise in the UBS Consumption Indicator that was reported yesterday. This contributed to the Swiss franc??™s slide against both the Euro and US dollar. Consumer price numbers are due for release and if they come out weak, the franc could extend its losses.

British Pound ??“ Unsurprisingly, housing market data printed strongly this morning with net consumer credit and mortgage approvals both rising. In fact, mortgage lending increased by the biggest amount in 3 years, illustrating the resilience of the housing market, which has been the primary driver of the economy. Money supply remained unchanged, suggesting that for the time being, inflationary pressures are not running away. More housing market data is due for release tomorrow but the market??™s main focus should be on the Gfk consumer confidence report and the CBI distributive trades survey. Both are predicted to be strong and if that is really the case, it could help the GBP/USD find some sort of support.

Japanese Yen ??“ Stronger Japanese data was reflected in the currency??™s performance against the Euro, British pound and Canadian dollar, but the rebound in the US dollar was so dominant that it overpowered the gains in the yen. Industrial production increased by 1.6 percent in the month of October, which was quite a surprise considering that the market was expecting the index to fall by 0.4 percent. Vehicle production also increased by 12 percent, which we believe must be tied to the weakness in the Yen against the Euro. The value of the Yen is making it very inexpensive for Europeans to import Japanese made cars. Meanwhile we also heard some bullish comments from Japanese officials last night. Both the Bank of Japan Governor Fukui and Finance Minister Omi said that the economy is expanding moderately and they are optimistic about its economic outlook.

Commodity Currencies (CAD, AUD, NZD) – The commodity currencies were all weaker against the US dollar despite the rise in oil and gold prices. Australia had a horrid trade balance number reported last night as well as weaker construction work. New Zealand reported disappointing building permits and stronger money supply growth. Canada reported a drop in industrial and raw material prices, which indicates softer inflationary pressures and a rise in the current account balance. Australian retail sales are due for release tonight and the recent trend of data suggests that spending could slow. Canada is set to report GDP, which is predicted to be stronger.

The z?oty was lifted by improved emerging markets sentiment and a weakened US dollar, and was unfazed by a central-bank projection showing inflation set to accelerate faster than previously expected.

The Monetary Policy Council kept rates at a record low in Poland of four percent last Wednesday, as it did not manage to find a compromise between hawkish and dovish members. Probably the central bank will not change its policy until year’s end.

Leszek Balcerowicz and his allies on the 10-member council are pushing for a preemptive rate-rise this year to cool down Poland’s red-hot economy, and the bank’s new projection on Thursday showed inflation set to soar above its 2.5-percent target in 2008. Urszula Grzelo?ska, the ruling conservatives’ candidate to replace Balcerowicz, said she could support steady rates for the next six months.

The Polish currency should still be supported by good fundamental data, but later gains will be limited.

Marek W?grzanowski

X-Trade Brokers Dom Maklerski SA

The dollar sank aggressively in early US Tuesday trading but then recovered some help from the strong US stock indices.

Euro/dollar
Euro/dollar surged to a six-week high of 1.2818 in early US trading but hen gave back about half of those gains. With no new US data to be released today, choppy trading should persist.

Above 1.2818, resistance is at 1.2873. Above this level, strong resistance is then seen at 1.2940 and 1.3010.

Immediate support is at 1.2750. If 1.2695 breaks, then expect the euro/dollar to challenge 1.2625. Distant support is at 1.2530.

Oscillators are mixed

NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/yen
Dollar/yen sank sharply early on Tuesday and reached tested 117.24 before recouping about half of those losses. Expect more of the same today, but with less punch.

Below 117.45, dollar/yen has distant support is at 116.85 by a 50-point pivot, which targets 116.35 and 117.35.

Above 118.00, there is resistance from the the key 118.25 50-point pivot that targets 117.75 and 118.75. Strong resistance remains at 119.65 from a 50-point pivot that targets 119.15 and 120.15. If the defense of the KO options at 120 is somehow surpassed, expect heavy hunting for stop-loss orders. Above 120.15, resistance is seen at 120.50.

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Sterling/dollar
Sterling/dollar rallied to a six-day high of 1.9121 before edging lower. It should attempt to challenge the high price of the uptrend and the market will take its cues from how the Cable performs there.

Above 1.9121 there is strong resistance at 1.9205. Further resistance is seen at 1.9222.

Immediate support is at 1.8995. That’s followed at 1.8950 bya pivot low. Further support is pegged at 1.8910. That is followed by 1.8850.

Oscillators are mixed

NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish

Dollar/Swiss franc
Dollar/Swiss recovered approximately half of its losses on Tuesday and should consolidate more today.

Below 1.2470, dollar/Swiss franc has strong support at 1.2438. Distant support now comes at 1.2405.

Initial resistance is at 1.2545. Above 1.2580, the pair has resistance at 1.2640. Distant resistance is at 1.2708 from a pivotal high.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bearish

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Yesterdays News and Events:

The Dollar edged lower on Tuesday in light and mostly technical forex trading in absence of key US economic data. Volumes are thin ahead of US Thanksgiving holiday on Thursday. The Japanese currency has been under pressure, with investors selling this low-yielding currency against higher-yielding currencies as Dollar, Euro and Sterling. Most analysts are expecting the BOJ to raise interest rates only gradually. This was confirmed by today release of BOJ??™s minutes from 12-13 October meeting. EurJpy ended around 151.38 just below Monday??™s record high 151.68. Dollar came under pressure after the White House lowered its forecast for US economic growth this year and also on speculation that the October unemployment rate could be revised higher. Of course, the US Bureau of Labor Statistics dismissed the rumor. EurUsd ended slightly higher at 1.2844 +0.25%. UK factory orders fell far less than expected in November to -6 against -15 forecasted and -20 in the previous month.

Todays Key Issues:

GB Bank of England Minutes is due at 9:30 GMT. Euro-zone September Industrial New Orders is due at 10:00 GMT expected -2% vs 3.7% (MoM) and 10.4 vs 14.3 (YoY). CAD October Consumer Price Index is due at 12:00 GMT expected -0.2% vs -0.5% (MoM) and 1% vs 0.7% (YoY). US November Initial Jobless Claims due at 13:30 GMT is expected 310k vs 308k.US November University of Michigan final Confidence is due at 15:00 GMT expected 93.1 vs 93.6. Thursday 23rd November; US Thanksgiving Day ??“ US Markets Closed, JPN Labor Thanksgiving Day ??“ Japanese Markets Closed.

The Risk Today:

EurUsd consolidated from Monday’s 1.2852 high and stopped just near the 1.2796 support (61.8% retracement of the 1.2761-1.2852 rise). The ability of this support to reject downward pressures from 1.2852 is a sign that the broader underlying tone is still positive. The next big barrier is the 1.290. A move above there would open the door toward the 1.2941 to 1.2981 strong resistance band. USDCHF remains heavy but will have to break last Tuesday’s 1.2384 reaction low to fully reinstate the down trend for a run at its 1.2346 support. GbpUsd’s recovery from 1.8835 is targeting the next resistance at 1.9050 (61.8% retracement of the 1.9182 to 1.8835 decline). Only a move above there would qualify 1.8840 as strong and key support. USDJPY remains stuck in a sideways trend between the 118.60 resistance and the 116.60 support. Only a breakout from this range would establish directional trend.

Resistance and Support:

EURUSD

GBPUSD

USDJPY

USDCHF

1.2981 S

1.9144 K

120.00 P

1.2707 S

1.2941 T

1.9050 S

119.90 T

1.2583 S

1.2901 S

1.9010 S

118.60 S

1.2540 M

1.2850

1.9005

117.72

1.2400

1.2750 M

1.8840 K

117.25 M

1.2346 K

1.2620 S

1.8770 S

116.60 S

1.2290 S

1.2450 T

1.8601 P

116.06 T

1.2185 T

S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

The building society’s monthly index fell to 69 from 74 in November – the sharpest drop since November 2008 – as consumers faced a year of economic uncertainty.

“The five point fall in confidence in December suggests that an element of caution may have begun to creep back into the minds of consumers over the Christmas period,” said Martin Gahbauer, Nationwide’s chief economist.

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“The looming VAT hike and other tax changes announced in the pre-Budget report may have impacted on confidence in December, forcing people to review their expectations for the future.”

The present situation index was unchanged, but the expectations index dropped by eight points. The proportion of consumers who thought the economic situation will be better in six months’ time fell to 34pc, from 41pc in November. However, the expectations index ended the year 43 points higher than it started it last January, when only 17pc of people thought the UK situation would improve.

“This comes at the end of a positive year for the index, which gained some upwards momentum in 2009 to help claw its way up from the record low seen in January,” said Mr Gahbauer.

House price expectations remained unchanged in December, with consumers forecasting a 1pc rise in the value of their homes over the next six months.

The proportion of consumers who felt now was a bad time to make a major purchase rose by four percentage points to 38pc in December, probably reflecting concerns over the end of the stamp duty holiday and the VAT rate increase on January 1 according to Nationwide.

Expectations for employment also worsened in December, with the proportion of people who thought there would be many or some jobs available in six months’ time falling to 25pc from 27pc, but 10 percentage points higher than January 2009.

“Although it is still early days, these lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn,” said Mr Gahbauer.

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Avatar has become the fastest film to make $1 billion in ticket sales

Avatar raked in 33m Chinese yuan on Monday, in a 3-D, 2-D and IMAX joint release, Weng Li, spokesman for state-run film importer China Film Group told The Associated Press in a phone interview on Wednesday.

Mr Weng called the result a strong showing but wasn’t sure if it was a first-day record. The modern benchmark for a hit in China is 100 million yuan ($14.6 million), and Avatar is on track to easily pass that mark in several days.

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But the publicist said the story of aliens on a foreign planet fending off American colonizers is set for even greater box office heights, predicting it will break the all-time box office record recently set by another Hollywood production, 2012. That disaster film had made 460m yuan ($67.3m) as of December 23.

Me Weng said “Avatar” could make 500 million yuan ($73.2m).

“I think it has very good momentum. I think it should break the ‘2012′ record,” he said.

The Chinese see a message in Avatar

The strong results on Monday came despite heavy snowfall Sunday in the Chinese capital Beijing, a major movie market.

Cameron is already a box office darling in China, with his last movie Titanic pulling in a then-unprecedented 360 million yuan in 1998 — a record that stood until last year, when it was broken by Transformers: Revenge of the Fallen and 2012. The Hollywood director also promoted Avatar in person in Beijing last month.

In wealthy Hong Kong, “Avatar” has earned 84.8 million Hong Kong dollars ($10.9m) from December 17 to Tuesday, Adrian Lo, a publicist for the Hong Kong distributor for Hollywood studio 20th Century Fox, said on Wednesday.

The movie made more than $1bn worldwide as of last weekend.

Chinese box office revenues are still small compared to the US, but they are growing rapidly. Government statistics show that revenues surged from 920m yuan in 2003 to 4.3bn yuan ($630m) in 2008 — compared to $9.8bn in the US in the same year. China had 4,100 movie screens as of the end of 2008.

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Reed Elsevier

The moves, expected in the next six months, were revealed in a leaked internal memo from John Poulin, chief executive of Reed Business Information (RBI) in the US.

Reed Elsevier tried to sell its global business information division, which includes magazines Estates Gazette and Variety, in 2008 but failed to achieve its £1bn to £1.3bn target price and market conditions have worsened since.

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The RBI division made revenues of £463m in the six months to June last year, contributing 15pc of the group’s total turnover and 5pc of operating profits.

Poulin told staff the US business, which has about 50 titles, was in advanced talks to sell some of its controlled circulation magazines – which are sent out free of charge and paid for by advertising – to separate buyers. Paid for magazines, including Variety and Reed Construction Data, will be kept.

Poulin did not name the controlled circulation titles which would be sold, but also said others would be closed.

“This unfortunately will result in title closures and job losses across the business,” Poulin said in the memo. “I know that this will come as a major disappointment but [it] reflects the impact of the structural changes in our markets, accelerated by the recession.”

Last year Reed closed Contract Journal, the 130-year old building magazine, in the UK.

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