Currency Updates:
U.S. Dollar Trading (USD) the USD was mixed yesterday stronger against the Euro but weaker against most of the other majors as stocks rebounded. Germany was downgraded by a smaller rating agency but the market shrugged this off and US stocks finished slightly higher recovering from heavy losses on Monday. US house Prices gains 0.7% and this was much better than expected but the US consumer Confidence fell for a 4th month in June. Looking ahead, May Durable Goods Orders forecast at 0.4% vs. 0.0% previously. May Pending Home Sales forecast at 1% vs. -5.5% previously.
The Euro (EUR) the EUR/USD eased back below 1.2500 again overnight with the downgrade of Germany by Egan-Jones adding weight but support was seen by talk in the market that the ESM may drop its preferred creditor status in helping countries. Other comments ahead of tomorrow’s EU summit came from German’s Merkal once again lowering expectations stating Europe will not have shared liability as long as she lived.
The Japanese Yen (JPY) the USD/JPY struggled to bounce with stocks and in fact ended pressuring the Y79.50 level with EUR/JPY selling outweighing the GBP/JPY and AUD/JPY rally. There is a lot of focus on Japanese politics lately with the tax hike being debated potentially splitting the ruling party
The Sterling (GBP) the rebound in stocks let the GBP/USD recover to 1.5650 and was one of the better performers on the day. The EUR/GBP was a big mover breaking the 0.8000 level and could be poised for a fresh down move as the Eurozone crisis rolls on. Also ahead, June CBI Distributive Trades forecast at 10 vs. 21 previously.
Australian Dollar (AUD) the AUD/USD grinded higher from 1.0000 to 1.0080 test but the market is cautious to get ahead of itself on the long side ahead of the ECB meeting which could disappoint and drag the Euro and global stocks lower. China is another big issue for the AUD/USD with the recent slowdown potentially snowballing into a bigger problem than first hoped. Looking ahead, no major economic data releases.
Oil & Gold (XAU) XAU/USD fell overnight even with the fairly weak USD as the market fell back to Monday levels near $1570. OIL/USD was basically unchanged after testing the downside and finding support at $78.50 which is a positive sign given the lows are getting higher.
