Currency Updates:
U.S. Dollar Trading (USD) in an important day of trading for the markets the Fed signaled that it was close to implementing a third round of stimulus to help a sluggish US recovery. The FOMC minutes suggested it was on the cards as soon as September unless ‘significant and substantial’ improvement in the economic data was seen. US stocks rallied off day lows and the USD was sold aggressively across the board. Looking ahead, Weekly Jobless Claims forecast at 365k vs. 366k previously. Also Flash US August PMI manufacturing forecast at 51.2 vs. 51.4 previously.
The Euro (EUR) the EUR/USD rally continued overnight on the back of the US FOMC minutes to break above 1.2500. The market is hopeful that the ECB will announce some form of Bond Buying program in the coming weeks and release the third tranche of Greece Loan Aid. More gains are very possible now that the rally has begun with 1.2650-1.2700 a reasonable upside target.
The Japanese Yen (JPY) the USD/JPY was hammered lower as the QE3 was put firmly back on the table in the FOMC minutes. Support at Y79 was broken and the pair quickly fell to Y78.50 undoing most of the rally last week in a single session. The outlook is for more range trading and a downside test of the Y78 level.
The Sterling (GBP) the GBP/USD surged towards 1.5900 on the back of the weak USD and is targeting 1.6000 in coming sessions with the uptrend in play. EUR/GBP is actually holding at the 0.7900 and could dip lower as the GBP holds its own against the Euro and traders still preferring the British Pound. Looking ahead, Q2 German GDP Final forecast unchanged at 0.3%. Also EU flash Manufacturing PMI forecast at 44.1 vs. 44 previously.
Australian Dollar (AUD) had very volatile trade with weakness in the Asian/European session on Chinese slowdown fears led to the market being caught short by the Dovish FOMC minutes. We soared above 1.0500 and had a large stop hunt in the early Thursday Asian session breaking to two week highs above 1.0530. The August HSBC Chinese PMI halted the rally however coming in very weak at 47.8 vs. 49.3 previously.
Oil & Gold (XAU) XAU/USD continued its technical break higher surging to $1665 so far in the Asian session with the printing presses in the US and Europe close to printing more money and increasing demand for the precious metal. OIL/USD continued to be well support rallying to fresh month highs above $98 so far on Thursday and eyeing a test of the psychological $100 level in coming days if the sentiment remains upbeat.
