Currency Updates:
U.S. Dollar Trading (USD) currencies were very quiet holding to the previous day’s range as traders wait for the EU summit to commence. Expectations are low so there is chance for positive surprise although if Germany does not compromise then we could see traders punish the Euro and risk assets lower. Looking ahead, Q1 GDP Final forecast at 1.9%. Weekly Jobless Claims forecast at 385k vs. 387k previously.
The Euro (EUR) the EUR/USD is pivoting around the 1.2500 in a holding pattern ahead of the major risk event of the week. Headlines will be coming out constantly and volatility is expected. EUR/GBP managed to reclaim 0.8000 overnight. During Asian trade today we saw the market break above 1.2510 and is so far well supported.
The Japanese Yen (JPY) USD/JPY rallied to Y79.80 with the USD stronger after good US data overnight but the market will require very strong data to break above the Y80 level and this may require traders to wait till next week with the US nonfarm payrolls. EUR/JPY is in play with the EU summit over the next 48 hours with the.
The Sterling (GBP) the GBP/USD came under pressure from the crosses overnight and fell to 1.5550 with talk in the market the BOE may expand the Asset purchase program next week at the central bank meeting. A small rally so far has seen Cable test 1.5600 in Asian trade Thursday. Looking ahead, Q1 GDP forecast at -0.3% vs. -0.3% previously.
Australian Dollar (AUD) the AUD/USD is quietly grinding higher with the stronger stocks and commodities. Resistance at 1.0080 was broken in Asia today and we are testing 1.0120-40 resistance in Europe. The outlook is for more gains if sentiment remains positive with the Australian economy still outperforming the rest of the world. Looking ahead, no economic data.
Oil & Gold (XAU) Gold gained slightly but was very quiet ahead of the EU summit which will focus on saving Spain and dramatically the Eurozone Bond prices. Bonds and Gold compete for safe haven flows and any drop in confidence in Eurozone bonds should result in gains for the precious metal. OIL/USD broke back above $80 as Norway Oil workers went on strike and technically a base has formed over the last two weeks.
