Currency Updates:
U.S. Dollar Trading (USD) the EUR/USD was sold to fresh lows overnight as the German constitutional court said the process of reviewing Germany’s role in the new ESM could take up to 3 months. There were various official responses hoping the decision came quickly as the markets will not wait. US Stocks moved lower on Chinese import declines indicating the world’s second largest domestic economy was slowing faster than expected. Looking ahead, May Trade Balance forecast at -48.5bn vs. -50.1bn previously. FOMC Minutes from June Meeting released.
The Euro (EUR) the German news added to an already shaky sentiment and a small relief rally was reversed in Europe down to 1.2225 before stabilizing at 1.2250. The EUR/JPY is on a steady downward trend falling to Y97 and is concerning to Japanese Official worried about exports to Europe. Investors are hoping for a quick agreement from EU members for the implementation of the ESM so that Spanish banks and Bonds may be supported.
The Japanese Yen (JPY) USD/JPY moved lower below Y79.50 finding support at Y79.30. More action was seen on the Yen crosses but most were relatively contained and we are now looking to the BOJ meeting on Thursday for the next catalyst.
The Sterling (GBP) Economic data in the UK was stronger than expected but weak US stocks meant little fresh direction for GBP/USD. EUR/GBP managed to fall below 0.7900 but there was little follow through. Looking ahead, German CPI is forecast at -0.1% in June m/m.
Australian Dollar (AUD) the AUD/USD shrugged off weak Chinese data to rally in Europe to 1.0240 but when the EUR/USD fell the AUD/USD was dragged back below 1.0200 finishing weak near 1.0180 support. Looking ahead, no economic data Wednesday.
Oil & Gold (XAU) XAU/USD reversed hard from the $1600 level falling to $1565 before stabilizing in a technically weak move for the precious metal. OIL/USD was under pressure for most of the day as the Norway strike and weak Chinese data inspired fresh selling. Support was found at the Key $84 level.
