Wednesday 30/11/2011 9PM CET

U.S. stocks rallied and there on course biggest gains since August, as central banks moved to make funds available to lenders as Europe’s crisis threatens global economic growth. This is good news? We don't think so and just goes to show how bad the situation in Euro zone has become..

The dollar has of course pulled back today - but Euro zone is finished in its present form and faces years of recession and this will keep the dollar firm. We will look at why in a moment but first lets look at our positions, some changes made today and some low risk trading opportunities to look out for:

Summary

AUD/USD: Were short AUD from 10800 and had been swing trading on the way down but our stop was hit today on the break above 1.010 and we have now banked all profit but we won't be flat for long – We will key off the1.040 level for shorts tomorrow on any signs of weakness and our downside target remains 80.00.

We see the 80.00 level being tested in the next few months and see this as one of the best trends on the board.

GBP/USD: We have been trading the short side of the Pound since 1.61 and its old off hard and last week we took 50% of our profit into chart lows and been waiting to put it back in and we are now going to key off the 1.58 level tomorrow AM which is Mid Bollinger Band resistance.

CAD/USD: We have been trading the CAD short since 1.010 but we banked our profit out today as our stop was hit but will look to key off the 99.00 resistance level tomorrow and get back short on signs of weakness.

EUR/USD:We were short from the pop up to 1.42 and we have been swing trading all the way down and took some profit last week into the lows expecting a rally and we have got one which has run up to test 1.36 and failed to break through. We will sell weakness tomorrow and key off this level – target remains 1.30 or lower.

USD/JYP: We bought the dollar on the break of 77.50 and sold it after it failed to follow through 78.50, its a small profit and we moved to the sidelines and were waiting to buy a dip

Euro Zone – The Sucker Rally Sell It

The world's major central banks today moved to provide cheaper dollar funding to European banks facing a credit crunch as the Euro zone's debt crisis escalates and at the same time, EU minsters are seeking IMF help to bail the zone out.

This is not good News! It means we are now at crisis point and the fact the worlds central banks are coming to help shows just how critical the situation as become. Italy has seen its borrowing costs soar up to 8 percent, level which is unaffordable in the long term on country with a 120% over GDP.

EU Finance ministers agreed yesterday plans to leverage the European Financial Stability Mechanism (EFSF), but could not say by how much because of rapidly escalating crisis but even when they said they wanted to make it a trillion, it was to small to have a real impact on the crisis . This showed how arrogant EU policy makers were a few weeks back, in that they thought the fund could solve the crisis but now, we have stumbled into a crisis which threatens the global economy.

Comment

Were sticking with the view we had several months ago that Euro zone is dead in its current form and the only thing to ponder is will there be a re structure of the zone ( the best option) or a disorderly break up ( worst option) either way, Euro zone is in recession, interest rates will fall and the debts, will take years to sort out. In our trading were short the Euro from 1.42 and have been swing trading all the way down and took profit last week into the lows.

We have key resistance 1.36 (tested today) which is the mid Bollinger Band. We do have a lot of speculative shorts and expected them to trigger a good short covering rally today and its occurred but longer term the trend is down and we expect to trade below 1.30 shortly.

China to Weigh on the Aussie Dollar

Stocks in China fell the most in almost four months, after a central bank adviser said he sees the nation keeping tight monetary policies next year and why wouldn't they? They have to inflation is still high and credit needs to be curtailed. As we have said numerous times – the Chinese double digit growth rates are over, as export markets shrink, with not enough demand at home to pick up the slack. We also have a housing bubble and reckless local government spending which has left them heavily in debt.

India – Slows Up and Hikes Rates

India's economy grew last quarter at the slowest rate in over two years after the nation’s central bank raised interest rates by a record to combat inflation as it struggles with rampant inflation which is almost twice the rate in China and at higher levels than, either in Brazil or Russia. So yet another Tiger economy slows up which is a reflection of a slowing global economy.

US Data Better than Expected

In the U.S., the number of Americans signing contracts to buy previously owned homes rose more than forecast. Companies added more workers than expected in November, according to a private report based on payrolls.

The Institute for Supply Management-Chicago Inc saw its business gauge go up from 62.6 in November from 58.4 the previous month. This is better news but the core problem in the US economy remains jobs and we still have over 9% unemployment which will sap consumer confidence and a dire housing market overall. There is long hard road to recovery...

Final Words

With the bearish backdrop to the global economy, we see the dollar as a buy on dips. This policy has served us well for months, made us great profits and we expect more to come.

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