Currency Updates:
U.S. Dollar Trading (USD) news that Greece had reached an agreement with bond holders helped stoke a further recovery in the EUR/USD and kept the USD under pressure through the European and US session. Stocks did little however with the recent rally running out of steam. In US stocks, DJIA -11 points closing at 12708, S&P +1 points closing at 1316 and NASDAQ -2 points closing at 2784. Looking ahead, Little US data but traders are focusing on the FED’s FOMC meeting Wednesday and any possibility of a change in monetary policy.
The Euro (EUR) the EUR/USD broke above 1.3000 as the short squeeze continued until finding resistance at 1.3050. The positive Greece news has been somewhat hampered in the Asia session Tuesday as comments from some EU officials they are not happy with the terms the private creditors have asked for. Looking ahead, January Manufacturing PMI forecast at 47.4 vs. 46.9. Services PMI forecast at 49.1 vs. 48.8 previously. Also, November Industrial Orders forecast at -2.1% vs. 1.8% previously.
The Japanese Yen (JPY) the USD/JPY was very contained around the Y77 level with action kept to the crosses with EUR/JPY breaking above Y100 and AUD/JPY Y81. The outlook for more Yen weakness is very possible if stocks continue to rally and EUR/JPY holds above Y100. UPDATE BOJ hold at 0.1% as widely expected.
The Sterling (GBP) Cable move to 1.5600 but failed to break above with EUR/GBP buying capping the Cable gains. The outlook is bullish short term but as always we looking to development in the Eurozone for sentiment. Some are looking for the BOE to increase the Asset purchase program at February’s interest rate meeting. Looking ahead, December Public Sector Debt forecast at 12.4bn vs. 15.2bn previously.
Australian Dollar (AUD) the AUD/USD extended the uptrend above 1.0500 and pushing to resistance near 1.0560 before easing on profit taking. The outlook is very strong for the Aussie which is only 5 cents off all-time highs in the middle of a debt crisis. Improving Chinese or US data should support going forward. Looking ahead, Q4 CPI on Wednesday forecast at 0.2% vs. 0.6% previously.
Oil & Gold (XAU) Gold also moved high breaking above $1670 with the Euro led weak USD. Oil Rebounded to test $100 with improving risk appetite supporting.
