Currency Updates:
U.S. Dollar Trading (USD) traders were waiting with anticipation for the ECB decision last night and were rewarded with some good volatility to trade. The ECB cut rates by 0.25% but the President Draghi was downbeat on the growth outlook for the EU and further operations to help the market. US stocks tanked and the US Dollar was very strong. Looking ahead, June NFP forecast at 90k vs. 69k previously. June Unemployment Rate forecast unchanged at 8.2%.
The Euro (EUR) the break of 1.2500 was sharp with very little support seen under the figure as the EUR/USD slid to 1.2350 by the start of the US session. Consolidation then prevailed but the market is in now looking at the 1.2300 low from last month which has been the cycle low. The NFP tonight may be a saving grace if QE3 expectations from the FED are increased.
The Japanese Yen (JPY) the USD/JPY remained on the sidelines with the action reserved for tonight’s NFP data from the US which is critical for setting the US monetary policy and helping traders choose between the two safe havens. EUR/JPY slid below Y100 and hit Y99 before stabilizing.
The Sterling (GBP) the GBP/USD had its own central bank interest rate meeting overnight and the bank did as forecast holding at 0.5% and increased the Asset purchase program to 375bn vs. 325bn previously to help liquidity and lending in the UK banking sector. GBP/USD was supported near the 1.5500 but the fate with be linked with the EUR/USD which is dragging most majors lower. Also ahead, June UK PMI forecast at -0.2% vs. -0.2% previously. May German Industrial Production is forecast at 0.1% vs. 2.2% previously.
Australian Dollar (AUD) the AUD/USD held up better than most overnight with EUR/AUD selling to record lows new 1.2000 helping the major to remain supported against the USD. China cut rates and this also helped keep the Asian neighbor currency in demand. The China story is critical for the AUD and will be closely watch in the 2nd half of the year. Looking ahead, May Japanese Leading Indicators previously at -1.3.
Oil & Gold (XAU) Gold rejected Wednesday’s high and fell quickly back to $1600 as the USD soared on EUR/USD selling. OIL/USD was volatile hitting new rally highs to $89 before reversing to $87 with US stocks and USD strength. The recent rally has to work through overbought signals before testing the $90 BRL level.
