Currency Updates:
U.S. Dollar Trading (USD) the markets rebounded as the September Manufacturing ISM increased to 51.5 vs. 51.1 previously. The market was not keen to sell USD on the data and faded a snap move high from Gold to the Euro causing USD demand for the second half of the US session. The outlook is mixed with the critical US NonFarm Payrolls data on Friday playing even greater importance since the FED linked employment directly to monetary policy. Looking ahead, no economic data from the US tonight.
The Euro (EUR) with little headline news from the weekend the market took its cues from Technicals and from improving risk appetite. The EUR/USD moved above 1.2900 but then reversed back under the figure the dollar resurgence began. There are major risk events for the Euro ahead that will start to dominate the headlines with the ECB meeting critical on Thursday.
The Japanese Yen (JPY) more jawboning overnight from Japanese Econ Min stating that Japan could possible start buying foreign bonds. The extreme option will directly weaken the Yen in favor of the countries bonds they are buying. The move is still not likely and last night the strong US data saw the USD/JPY close above Y78 on a strong footing.
The Sterling (GBP) the GBP/USD underperformed again overnight with the market still in shock after the sharp selling on Friday and we didn’t manage to reclaim 1.6200 even with the mood improving. The source of the weakness is hard to pinpoint but traders point to weak crosses with EUR/GBP in particular overnight breaking back above 0.8000. Looking ahead, September UK Nationwide House Price forecast at 0.0% vs. 1.3% previously. Also EU PPI forecast at 0.5% vs. 0.4% previously.
Australian Dollar (AUD) the AUD/USD is another currency getting a lot of attention overnight with the RBA today and many expect them to cut rates to help support a faltering economy. The AUD/USD bounced off 1.0330 supports in Asia yesterday but failed at 1.0400 and is in a holding pattern waiting for the RBA announcement. A hold decision should allow the Aussie to retest 1.0400 and a continuation of the recent range trading seen between 1.0300-1.0600. Looking ahead, RBA Interest Rate Meeting forecast to hold at 3.5%.
Oil & Gold (XAU) Gold traded at fresh year highs above $1790 but reversed lower later on profit taking flows. OIL/USD bounced with US equities back above $92 a barrel and better positioned to attempt a move higher after finding support near $90 in recent sessions
