Currency Updates:
U.S. Dollar Trading (USD) the USD is under pressure at the open on Monday with the Greece elections looking like the Pro Euro and Austerity party had the most votes and first chance to make a coalition government. The situation is still unresolved though and markets will be watching closely new developments. Asian stocks are higher and the EUR/USD opened above 1.2700 although some profit taking has been seen already. Looking ahead, G20 meetings start today in Mexico.
The Euro (EUR) the EUR/USD was the biggest gainer on Monday morning from the Greece election news opening near 1.2740 after closing at 1.2650 on Friday. The upside potential will require the yields in Spain and Italy to now move lower in coming days or this relief rally will reverse. The G20 meeting will be focusing on Europe in Mexico over the next few days and we could see some action taken that will help restore confidence in European debt markets.
The Japanese Yen (JPY) the USD/JPY moved higher on the back of the strong EUR/JPY and AUD/JPY buying with the major now back above Y79. USD weakness has been stronger then the Yen weakness lately with EUR/USD dominating the USD/JPY short term direction. This weeks FOMC meeting is extremely important for the USD/JPY and we could see significant downside if QE3 is announced and topside if they choose to ignore it again.
The Sterling (GBP) GBP/USD is strong above 1.5700 as the relief rally begins to get legs and the market plays catch up for the GBP/USD. The recent move from 1.6200 to 1.5300 means the topside is still significant if the EU debt crisis can be delayed or resolved in the short term. EUR/GBP is a good pair to watch to help you gauge the current EURO strength/weakness bias in the market.
Australian Dollar (AUD) the AUD/USD is going from strength to strength now we are back above parity and the Greece situation has at least averted a disaster. AUD/JPY flows are helping and the Yen cross is now back above the key Y80 level. Looking ahead, no economic data.
Oil & Gold (XAU) Gold is ranging above $1600 with the USD weakness supporting but potentially some safe haven demand will drop for the precious metal if Bonds perform better. OIL/USD is back near $85 with the commodity expected to trade in the same direction as stocks.
