Currency Updates:
U.S. Dollar Trading (USD) the positive risk appetite continued to grow overnight with the ECB not making any mistakes and helped stocks continue to rally. The FOMC minutes halted the rally with some members arguing for less specific dates for raising interest rates in the future. With the September NonFarm Payrolls looming we are expecting some consolidation ahead of the numbers with little movement till their release. Looking ahead, September NonFarm Payrolls forecast 113k vs. 96k previously. Also Unemployment Rate forecast at 8.2% vs. 8.1% previously.
The Euro (EUR) the move up to 1.3000 was fueled by stops being hit above 1.2970 and everyone hopping on to the long bandwagon after the ECB president reiterated he was ready to implement the OMT bond buying program if needed. The big move of late has been the EUR/JPY which has enjoyed heavy gains this week but the true test of strength will be the NFP tonight.
The Japanese Yen (JPY) the BOJ met in Asia today and didn’t offer the market any new stimulus and this disappointed the Yen Bears and we saw the Yen strengthen across the board to take back some of the losses from the last 48 hours. The US NFP number is always a big mover for the USD/JPY and we expect the same tonight.
The Sterling (GBP) the GBP/USD enjoyed rare support as the BOE held at 0.5% and didn’t change its own QE program. The Pound tracked the Euro higher and we finished just under 1.6200. The recent run of bad data and losses had started to undermine the rally seen over the last month but last night’s performance was strong enough to scare the shorts. Looking ahead, August Industrial Orders forecast at -0.5% vs. 0.5% previously.
Australian Dollar (AUD) the AUD/USD enjoyed a relief rally after being under pressure for most of the week. Strong US stocks and a weak USD is supporting for now but on its own the AUD has lost a lot of support recently given the change in interest rate outlooks. UPDATE BOJ Hold at 0.1% with no new stimulus.
Oil & Gold (XAU) Gold began its advance towards the November 2011 highs $1800. The Bond buying talk from the ECB and expectations of subdued US jobs tonight is creating a perfect environment for Gold Strength. Oil rebounded aggressive with traders caught short after the $6 drop this week. Oil Closed above $91.
