Merry Christmas and a Happy New Year to all A recovery in the Bloomberg commodity index, as well as a strong rebound in oil prices saw another strong day of gains for the oil and gas and basic resource sector yesterday, driving the FTSE100 to a two week high in the last full day of trading before Christmas. A sharp decline in weekly crude oil inventories also helped reinforce yesterday’s rebound but the rally also needs to be set into the context of thinning pre-holiday volumes as traders look at making a start on various end of year book keeping and position adjustments as markets wind down for the long Christmas break. It is these sorts of end of year adjustments that helps explain to some extent why the biggest risers over the past couple of days have come from the sectors that have seen some of the biggest losses year to date. Even allowing for the rebound seen in the last couple of days, equity markets are still well below the levels that we started out at in the first week of December. The rebound in oil prices yesterday also helped bring about a brief respite for the Canadian dollar as well as other commodity currencies, while the pound also enjoyed a rare positive day despite a weaker than expected revision to the latest Q3 GDP numbers. US markets also enjoyed another strong finish last night despite some fairly lacklustre November economic data, but this isn’t likely to translate across to European markets which is likely to see a fairly lacklustre start to today’s holiday shortened European session, while on the data front it is also expected to be a fairly light day. In the UK we get the latest November mortgage approvals data from the BBA, while in the US the latest weekly jobless claims numbers are expected to remain fairly static at 271k. EURUSD – currently trading in a range between key support around the 1.0800 area, and resistance near the 1.1000 area with larger resistance at the 100 and 200 day MA at 1.1040/50. Only a move below the 1.0800 level argues for a retest of the 1.0620 area. GBPUSD – the pound has managed to find some support just above 1.4800, but the outlook remains uncertain with the potential to return towards the lows of the year at 1.4565. To break the current downside momentum we would need to see a move back through the 1.5030 level. EURGBP – despite a brief peak above the 0.7400 level the euro has slipped back, but needs to break back below the 0.7300 level to suggest a top is in place. While above the 0.7300 area the risk remains for the euro to push up back towards the October peaks at 0.7495. USDJPY – continues to chop within the broad range with the 122.20 area acting as a pivot. While below here support sits near 120.00, while a break above retargets the highs just above 123.00 CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.