Currency Updates:
U.S. Dollar Trading (USD) the market rallied overnight and into Asia on Tuesday with expectations rising that the US central bank Chief Ben Bernanke will hint at more stimulus when he speaks before the senate banking committee. Overnight June Retail Sales fell -0.5% and this cause the market to rally on the perverse idea weak economic data will mean the FED will do more to stimulant the economy. Looking ahead, June CPI forecast at 0.0 vs. -0.3% previously. FED Chairman Bernanke speaking.
The Euro (EUR) the EUR/USD enjoyed a second day of rare gains up to 1.2270 after stocks continued to rally and fears eased that the Debt crisis was spirally out of control. The USD weakness from the growing FED easing speculation also helped underpin the rally but for more substantial gains we are going to need solid news.
The Japanese Yen (JPY) was stronger against the troubled USD but was sold against most pairs with the ‘risk on’ mood. USD/JPY broke below Y79 and is struggling to find support in recent trading sessions. The EUR/JPY fell to the lower Y96 region before rebounding to Y97 in Asia today.
The Sterling (GBP) was the strongest currency in the market gaining against the USD and Yen and also making small gains against other risk assets with the UK seen as a better bet than the Euro for going forward. EUR/GBP broke 0.7850 and is making daily fresh lows. Looking ahead, German July ZEW forecast at 30 vs. 33 previously. Also June Retail Sales forecast at 0%.
Australian Dollar (AUD) the AUD/USD was well supported on a dip to 1.0200 and finished the day near 1.0250. In Asian trade on Tuesday we saw an extension of the rally to 1.0300 on the back of neutral RBA minutes suggesting the central bank was done for now cutting interest rates.
Oil & Gold (XAU) Gold rallied as speculation mounted the US central bank will do more to stimulate the US economy and this would weaken the Greenback. OIL/USD rallied to $87 with stocks and positive mood and likely to continue higher in the new contract month starting today.
