Currency Updates:
U.S. Dollar Trading (USD) the USD rebounded today against most risk currencies yesterday as stocks pulled back on profit taking sparked by weak economic data. April Chicago PMI fell to 56.2 vs. 62.2 previously in a dramatic fall in manufacturing confidence back to 2009 levels. Looking ahead, March US PMI forecast at 53 vs. 53.4 previously. Also 3 different Fed speakers tonight could lead to volatility.
The Euro (EUR) a very quiet start to the week with some slight selling in Europe as Spain was officially put into recession after printing a -0.3% Q/Q rate of GDP in Q1. German Retail Sale grew 0.8% in March and this helped improve sentiment slightly as the German economy is by far the largest in the EU.
The Japanese Yen (JPY) the USD/JPY broke Y80 with little fanfare falling to Y79.80 in gentle but solid selling. The market has not been able to regain the Y80 level so far and this is a negative sign. Crosses are more resilient bouncing off lows in Asia but with stocks pulling back off highs the temptation to buy with USD/JPY under pressure may be dampened.
The Sterling (GBP) the GBP/USD tested 1.6300 before reversing on profit taking down to 1.6220 as the recent rally ran out of steam. Such pullbacks help a rally technically as overbought signals are reduced and allow buyers to get in at cheaper levels. Looking ahead, April UK PMI manufacturing index forecast at 53 vs. 53.4 previously.
Australian Dollar (AUD) the AUD/USD pulled back overnight as the coming RBA risk event prompted the buyers in recent days to take profit in case the central bank cuts rates more than expected today. The RBA statement will also be digested for clues on the future policy action and issues on the RBA’s mind. Looking ahead, RBA forecast to cut rates to 4.0% vs. 4.25% previously. UPDATE CHINA PMI at 53.3 vs. 53.6 slightly less than expected.
Oil & Gold (XAU) Gold fell sharply $15oz on the Chicago PMI but then rebounded back above $1660 in a surprisingly bullish move. OIL/USD remained in the $104 vs. $105 range as we waited for fresh inspiration.
