USDX Boosted by Weak EUR, Fading JPY

French consumer confidence fell and Italian retail sales dropped; Italian short and long term yields rise; Italian Bill auction results in higher yield; USDX at 7 week high, breaking out of the 100 & 200 week moving averages. Poor liquidity and erratic movements likely during the NY session. LATEST PREMIUM TRADES include an important development in the MONTHLY EURUSD chart, with 3 new trades in EURUSD, USDCAD & EURJPY.

USD is soaring today as risk aversion heightens further due to sharp rise in European yields. GBP is also relatively strong while EUR and NZD are the biggest losers. Major European equities are losing about 0.5%.

Long series of disappointing European data continued today as French consumer confidence declined in November to 79 from 82 and September Italian retail sales fell -1.6% from -0.3% on annual basis. Eagerly awaited Italian short term debt auction did not provide a reason for optimism either as Italy sold EUR 8 bln of six months Bills with average yield of 6.5%, significantly higher from previous 3.53% with bid to cover at 1.47, lower from previous 1.57. EURUSD fell to 1.3236, the lowest level since the beginning of October.

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Despite ECB buying, the 10 year Italian yield is firmly above the critical 7% level at 7.27% and another reason for concern is sharp rise in 2 year yield which jumped nearly to 8%. Spanish 10 year yields 6.74% but the German-Spanish remains below 5% as even German yields rise.

USD index reached 7 week high today, eyeing the psychologically important 80 level which roughly coincided with October high at 79.84. Should the resistance be broken, next target is January high at 81.31 followed by 8/2010 high at 83.56. USDX is currently trading around 79.54.

US stock markets close at 1 pm EST, while US bond markets are all closed, liquidity will be poor and erratic movements are likely. There are no fundamental data releases due today.