Currency Updates:
U.S. Dollar Trading (USD) weak stock markets prompted commodities to fall back sharply overnight. OIL/USD fell $3 in a very short period from $98 to $95 in what they are calling a ‘flash crash’ for the energy. The SEC is currently investigating the move which traders suggest was computer programmed high frequency trade that caused the move. Some concerns regarding Spain Bond spreads added to the downside pressure. Looking ahead, FOMC Member Dudley Speaks. Also Q2 Current Account forecast at 38bn vs. 37bn previously.
The Euro (EUR) the EUR/USD eased back below 1.3100 as market wide profit taking hit the major. Doubts about the size and timing of a Spanish Bailout have seen the Yield on Bonds once again start to tick higher. The market used this as an excuse to pull back after staging considerable moves higher in the past few days. ECB Member Coene stated easing options included ECB rate cuts and more LTROs.
The Japanese Yen (JPY) the USD/JPY rally continued with the rejection of sub Y78 levels leading to another move to the topside this time up to Y78.90 highs. The market has since fallen back but the bears are caught on the wrong side in the last 2 days. The Yen and the Dollar are fighting for weakest currency at the moment and the Yen is winning as the EUR/JPY soars and GBP/JPY supports.
The Sterling (GBP) the GPD/USD outperformed other majors gaining on the day even as stocks fell in the US session. The move above 1.6250 mean the EUR/GBP fell back to 0.8060 and could retest 0.8000 if the Euro rally falters. Looking ahead, August CPI forecast at 2.5% vs. 2.6% previously. Also August Retail Price index forecast at 3.1% vs. 3.2% previously.
Australian Dollar (AUD) the Aussie broke support at 1.0500 and we fell down to 1.0455 before stabilizing as weakness crept back into the Aussie. Fears that China was slowing faster than forecast and the large falls in commodities weighed on the risk currency. Looking ahead, RBA Minutes from September Meeting. Also Assist RBA Gov Debelle Speaks.
Oil & Gold (XAU) Gold reversed from recent highs as the rally stalled. OIL/USD snapped lower in 1 min falling $3 a barrel and has led to an investigation of the price action by the SEC in the US. Support was found at $95 before stabilizing.
