Currency Updates:
U.S. Dollar Trading (USD) a relatively quiet day on the markets with some positive and negative news keeping most pairs in tight ranges. The big move was seen in the USD/JPY which moved up to Y78.75 as US Yields creeping higher. Bernanke spoke on the Euro Crisis having a ‘pretty significant’ effect on the US recovery. Looking ahead, Q2 Productivity forecast at 1.3% vs. -0.9% previously. Also Q2 Labor Costs forecast at 0.6% vs. 1.3% previously.
The Euro (EUR) the EUR/USD retested Monday highs at 1.2440 before falling back in the US session while we wait for more information from the Eurozone. Commentary overnight including Junker stating that a Greek Exit would be manageable but carry enormous risks. Other talk in the market was that Spain would not be asking for an additional bailout above the one already offered for its banking sector.
The Japanese Yen (JPY) the USD/JPY rally caught the market a little short with little reason for the move higher other than a small rally in US bond yields. The EUR/JPY and AUD/JPY both hit multi week highs but we have seen Asia so far on Wednesday selling into this strength and paring back the US session gains.
The Sterling (GBP) the GBP/USD rallied to 1.5650 before easing back with the Euro in the US session but overall did much better than most pairs and finished higher on the day. Looking ahead, June German Trade Balance forecast at 15bn. June Industrial Output forecast at -0.8% vs. 1.6% previously.
Australian Dollar (AUD) the AUD/USD had an eventful day with the market hitting 1.0600 just after the RBA held rates at 3.5% yesterday in Asia but this was short lived and profit takers have taken control reversing the pair lower. Support is seen at 1.0530 and 1.0480 where we should see solid support with the Aussie enjoying the benefits of a commodity and Stock market rally. Update Japan June Current Account forecast at -19.6bn vs. -62.6bn forecast.
Oil & Gold (XAU) the precious metal continued its rally to $1618 before easing back to $1610 as the rally ran out of steam. OIL/USD overextended itself to the topside surging to $94.50 before reversing back to the lower $93 levels on wide spread profit taking seen in most markets.
