Currency Updates:
U.S. Dollar Trading (USD) the Dollar remained on the back foot as traders took on more risk after stock markets globally continued their march higher. The Bank of Canada held rates at 1.0% but was quite dovish in the accompanying statement and this caused the CAD to underperform the rest of the market. In US stocks, DJIA +50 points closing at 11837, S& P +1 points closing at 1295 and NASDAQ +10 points closing at 2765. Looking ahead, December Housing Starts are forecast at 0.55mln and December Building Permits are forecast at 0.555mn vs. 0.53mn previously.
The Euro (EUR) the market moved higher in Europe in response to very strong January German Zew Survey numbers at 15.4 vs. 4.3 previously. The market traded into the mid 1.3400 region before profit taking in the US session pushed the pair back under the figure. EUR/USD traded with a low of 1.3252 and a high of 1.3468 before closing at 1.3390. Looking ahead, November Current Account is forecast at -11.3bn vs. -9.8bn previously.
The Japanese Yen (JPY) was contained to Monday&rsquo s range with the market moving on US Treasury Yield fluctuations predominately. Crosses are reflecting moves in their respective majors so are all moving higher tracking equity markets led by the EUR/JPY. Overall the USDJPY traded with a low of 82.31 and a high of 82.85 before closing the day around 82.60 in the New York session.
The Sterling (GBP) broke above 1.6000 after very hot CPI numbers at 3.7% vs. 3.3% previously y/y. The BOE is an inflation targeting central bank with 3% the upper limit and this is leading to speculation the bank will be forced to raise rates to contain inflation if CPI remains high this year. Overall the GBP/USD traded with a low of 1.5893 and a high of 1.6062 before closing the day at 1.5980 in the New York session. Looking ahead, December Claimant Count is forecast at 1.5k vs. -1.2k previously.
The Australian Dollar (AUD) tested resistance at parity for most of the day after tracking higher in Asia on the back of strong risk appetite. AUD/JPY also moved higher but many crosses were under pressure as traders pared back expectations of RBA rate hikes in 2011 after the devastating QLD floods. Overall the AUD/USD traded with a low of 0.9895 and a high of 1.0008 before closing the US session at 0.9995.
Oil & Gold (XAU) grinded higher for most of the day reclaiming the $1370 level. Overall trading with a low of USD$1360 and high of USD $1377 before ending the New York session at USD$1373 an ounce. Oil was steady in relatively quiet trade. WTI Oil Closed +$0.15 at $91.25 a barrel.
