Currency Updates:
U.S. Dollar Trading (US) risk aversion and fear is spread through the market on Monday with Italian bond spreads increasing 57bps vs. Germany. European banking stocks slumped on EU debt the banks hold and US banks listed in Germany also fell sharply on weekend news the US would sue the banks over mortgages. The US was away on Holiday but futures showed heavy losses for Tuesday open. Looking ahead, ISM Services forecast at 51.2 vs. 52.7 previously.
The Euro (EUR) the Euro led the market lower falling against most currencies with EU debt concerns dominating ahead of the ECB rate meeting on Thursday. July Retail Sales increased 0.2% vs. -1.2% previously. EUR/CHF and EUR/JPY fell heavily with the risk off environment. Looking ahead, Q2 GDP forecast at 0.2%. Also, July German Industrial Orders forecast falling -1.5% vs. +1.8% previously.
The Japanese Yen (JPY) was stronger against 13/16 of the biggest currencies with risk aversion providing support. USD/JPY was not interesting however holding to a 30 pip range comfortably all day. EUR/JPY and AUD/JPY selling is noted in markets and could fall further is the situation deteriorates.
The Sterling (GBP) a weak Services PMI saw the GBP/USD break 1.6100 with August reading at 51.1 vs. 55.4 previously. EUR/GBP was able to pare back gains though after rallying at the start of Europe to fall to fresh lows by the end of the day. The BOE rate decision on Thursday could surprise with an increase in the QE program they have in place.
The Australian Dollar (AUD) the Aussie was under pressure from the open gapping lower and continue to push towards the 1.0500 key support as fear spread in the market of a fresh banking crisis in Europe. A data packed week will provide plenty of movement in what could be a very volatile week for the risk currency. Looking ahead, RBA Rate announcement forecast at 4.75%.
Oil & Gold (XAU) Gold tested $1900 an ounce on safe haven demand and is in striking distance of all time highs. Crude continued to slump falling with stocks to $83.50.
