Currency Updates:
U.S. Dollar Trading (USD) the Dollar is on the front foot in Asia Monday as concerns about Spain’s hesitancy to formally ask for a bailout adds uncertainty to the future. The EUR/USD is testing fresh lows and stocks are on the back foot. China is away for the whole week on holiday’s and should limit some of the speculation on the Asian giant. Looking ahead, ISM Manufacturing forecast at 50 vs. 49.6. Also FED Chairman Bernanke Speaks.
The Euro (EUR) the results of the Spanish Bank audit were roughly as forecast and was a non event for the market. The Downgrade rumors got the market selling for most of the US session and we closed at lows of the day. The outlook is mixed with more downside possible as Spain deliberates asking for a bailout and Greece remains ongoing issue.
The Japanese Yen (JPY) the USD/JPY hit Y77.50 support before reversing for most of the US session last Friday to close at Y78. The outlook is for more losses as the USD weakness but we have seen the pace of downside has been very slow. Key level at Y77.13.
The Sterling (GBP) the GBP/USD hit day highs at 1.6260 during the European session but was slammed lower in the US session. The heavy Euro and risk off stocks were the main catalyst for the Pound along with talk of month end flows being were largely GBP negative. Looking ahead, EU September PMI forecast at 46.0. Also UK September PMI forecast at 49.
Australian Dollar (AUD) the AUD/USD is following the stock markets and the commodities so we had a negative day on Friday as US equities fell hard. The general China slowdown fears are always lurking in the background and makes it easy to sell on rallies. The RBA meet tomorrow and the consensus is that they are going to cut interest rates by 0.25%. Update September Chinese PMI Manufacturing at 49.8.
Oil & Gold (XAU) Gold fell back sharply as the USD rallied and we saw a move from $1780 back to $1765 threatening the uptrend. OIL/USD was not immune to the broad risk off environment and fell back to $91 a barrel.
