Currency Updates:
U.S. Dollar Trading (USD) some inevitable profit taking occurred on Monday after the dramatic rally on Friday with some doubts on whether the EU plan to use ESM funds to bailout the banks and Spain going to be passed by all the EU members. News emerged that Finland and Netherlands were opposed to using the ESM to buy bonds and this sent the Euro and US stocks lower. June ISM Manufacturing also fell into contractionary territory at 49.7 vs. 50.5 previously and adds to calls for further Fed action to help the US economy. Looking ahead, May Factory Orders forecast at 0.2% vs. -0.6% previously.
The Euro (EUR) the EUR/USD topped out near 1.2680 in Asia and was under pressure as fractures emerged between the EU nations to use more money to buy bonds. The pullback found support at 1.2570 and we spent the rest of the day in tight consolidation. The outlook is mixed with the ECB on Thursday possible providing more support and helping the EUR/USD to test higher once again.
The Japanese Yen (JPY) the USD/JPY dropped on the weak US data which prompted more calls for QE from the FED in coming months. The market is rallying in Asia so far on Tuesday though defying the QE talk with demand for crosses helping lift the major.
The Sterling (GBP) was barely affected by the EUR/USD selling instead taking advantage on the EUR/GBP to once again test the key 0.8000 level support. The market has ended near 1.5720 highs even though the market is pricing in more QE from the BOE on Thursday which is traditionally bad for the country’s currency. Also ahead, May EU PPI forecast at -0.3% vs. 0.0% previously.
Australian Dollar (AUD) the AUD/USD was up and down all day in a 50 pip range around the 1.2040 level. The outlook is for more gains if stocks continue to fall with economic data recently strong from the commodity country after the RBA cut rates. The RBA meets today and is expect to wait before indicating if more cuts are needed after cutting at the last two rate meetings. Support is seen at 1.01800 if they are unexpectedly bearish. Looking ahead, RBA Rate Announcement forecast to hold at 3.5%.
Oil & Gold (XAU) was caught in a $10 range below $1600 as the market consolidated the move higher on Friday. The market is eye key resistance slightly higher at $1607. OIL/USD fell back to $82.00 before reversing sharply back to $85 in volatile trade.
