Currency Updates:
U.S. Dollar Trading (USD) the mood darkened in Europe and we saw most pairs follow the Euro lower to the benefit of the USD. The biggest concern was the fresh Greece conflict this time between Germany demanding more oversight of the Greece budget and the Greece Fin Min Furious denial of this possibility. The US session saw a late rally off lows and the sentiment in Asia this morning is improving on further. In US stocks, DJIA -6 points closing at 12653, S&P -3 points closing at 1313 and NASDAQ -4 points closing at 2801. Looking ahead, January Chicago PMI forecast at 63 vs. 62.2. January Consumer Confidence forecast 68 vs. 64.5 previously.
The Euro (EUR) the Euro selling began in Asia and continued throughout Europe on the back of conflict between Germany/Greece on the next Greece budget but some positive comments from Portugal and seemingly successful EU summit allowed a bounce. The buying is accelerating on Tuesday’s Asian session on the back of reports comments from Greece PM Papademos that talks were making significant progress. Looking ahead, December Unemployment forecast at 10.4% vs. 10.3% previously. Also, December Retail Sales forecast at 0.9% vs. -0.9% previously.
The Japanese Yen (JPY) the downtrend continued overnight with the USD not getting respite from the EUR/USD with EUR/JPY falling just as quick. The Yen is resuming its advance towards Y75 and could prompt more intervention talk or actually intervention if the selling accelerates. UPDATE December Industrial Production at 4% vs. 3% forecast m/m.
The Sterling (GBP) GBP/USD outperformed the Euro and most pairs overnight with EUR/GBP providing support and the Cable pivoting the 1.5700 level. The outlook is mixed but if the Euro rallies than the next leg higher may see a 1.6000 test. Looking ahead, December Credit is expected at 0.4bln vs. 0.4bln.
Australian Dollar (AUD) the AUD/USD was technical set up for a significant correction after the double top at 1.0680 and this proved correct with a sharp fall to 1.0530 before reversing with fresh buyers and the bounce in US stocks. The outlook and trend is still higher with a test of 1.1000 likely. UPDATE December Business confidence at 3 vs. 2 previously.
Oil & Gold (XAU) Gold dipped to $1720 before resuming its strength back above $1630 by the close. Oil dipped to recent supports under $98.50 before rebounding with US stocks into the close.
