Currency Updates:
U.S. Dollar Trading (USD) the Dollar was under pressure in Asia and Europe as stocks enjoyed solid gains and the new ECB LTRO lending facility saw good demand. The new facility lent E489bn to banks and could free up money to lend to business and buy more European bonds. Stocks reversed in the US session however and the Dollar ended higher against most currencies. In US stocks, DJIA +4 points closing at 12107, S&P +2 points closing at 1243 and NASDAQ -25 points closing at 2577. Looking ahead, Weekly Jobless Claims forecast at 375k vs. 366k previously. Also December, UoM Consumer Confidence previously at 68.
The Euro (EUR) the EUR/USD spiked higher on the excellent demand for the new ECB lending facility. After testing 1.3200 however the market reversed and fell during the US session as analysts suggested banks would not use the money to invest in European bonds. Yields on Italian debt increased as this view became more widespread. Looking ahead, no data today.
The Japanese Yen (JPY) the USD/JPY ended above Y78 returning to the top end of the recent range as the Euro selling helped the Dollar rally against all currencies. A break above Y78.30 would open up recent intervention highs near Y80 and could create a new trend after months of consolidation. AUD/JPY and EUR/JPY fell with stocks but are supported technically and would move higher if the USD/JPY rallied. The BOJ held at 0.1% as widely expected.
The Sterling (GBP) fell in the US session but at a slower pace than the Euro which pushed EUR/GBP to fresh lows near 08300. The outlook on the cross is still bearish and threatens to slip back further towards 0.8000. EUR/GBP has spent most of the past few decades below 0.8000. The MPC minutes were 0-9-0 as expected but they did discuss the potential for more QE next year. Looking ahead, Q3 GDP forecast at 0.5%.
The Australian Dollar (AUD) the AUD/USD rallied to 1.0200 but then reversed as the EUR/USD and US Stocks changed direction. The risk currency is at the mercy of other markets but the underlying strength on the Australia economy is still there and the interest rate differential creates a constant support. Support is seen below Parity with large business hedging at rates under the key level.
Oil & Gold (XAU) tested $1630 but struggled to hold onto the gains falling back to $1610. Crude Oil rallied to $99 bucking the trend of other commodities.
