Currency Updates:
U.S. Dollar Trading (USD) stocks and commodities continued to rally overnight but currencies were quiet with some major risk events ahead. Tomorrow the European Central Bank and the Bank of England have interest rate meetings. US stocks rallied after May Factory Orders gained 0.7% vs. 0.2% and was a welcome change from the recent trend of weakening data. Looking ahead, Public Holiday for US Independence Day.
The Euro (EUR) the EUR/USD was pivoting the 1.2600 level with little movement except for a pullback in the European session to 1.2560 and rally to 1.2630 in the US session. The outlook is mixed still with EU Pact still to be ratified by most countries and the ECB to meet tomorrow with expectations of a rate cut high and possible new information on the EU Bailout.
The Japanese Yen (JPY) the USD/JPY rallied to Y79.9 before stabilizing for the rest of the trading day unable to break the key Y80 level. AUD/JPY and EUR/JPY were stronger enjoying the major’s rally but both are also related to the stock market and its fate will determine direction.
The Sterling (GBP) the GBP/USD was even more stable than the EUR/USD with 1.5700 containing a few attempts higher. The BOE meeting is expected to result in an increase in the Asset Purchase Program by 50bn. UK PMI was lower than expected at 48.2 vs. 53.3 forecast. Also ahead, June EU PMI Services forecast at 50.3 vs. 51.8 previously.
Australian Dollar (AUD) the AUD/USD was well supported from the stock market rally with the RBA hold at 3.5% and indicating patience and caution going forward with European and Chinese threats still existing to the Australian economy. They did not however the underlying outlook and strength of the Commodity powerhouse was positive. UPDATE May Retail Sales Positive at 0.5% vs. 0.2% previously.
Oil & Gold (XAU) Gold kicked higher to $1620 with commodities all enjoying substantial gains as investor risk appetite picked up. OIL/USD broke above $85.00 and rallied to $88.00 before stabilizing at $87.50. Fresh Iran fears and ongoing Norway Strike is affecting production.
