Currency Updates:
U.S. Dollar Trading (USD) recent economic data has started to push up yields on US treasuries and this is directly affecting the USD/JPY which has broken back above Y80 for the first time in 3 months. September Durable Goods Orders surged 9.9% vs. -13% last month. Q3 GDP tonight will be critical for the recent Dollar strength. Looking ahead, Q3 GDP forecast at 1.9% vs. 3.3% q/y.
The Euro (EUR) broke above 1.3000 in European trade but the move was short lived with EUR/GBP and EUR/AUD selling weighing on the major. Concerns that Greece could not come to a political agreement on the new labor reforms with opposition rejecting the Troika’s demands. Also S&P downgraded multiple French banks overnight and this added to the underperformance. EUR/USD ended near 1.2940 supports.
The Japanese Yen (JPY) USD/JPY was in the headlines breaking and closing above the Y80 level. Further gains saw Y80.40 tested and we could be in store for sharp moves higher if the shorts capitulate. AUD/JPY and EUR/JPY have both been underperforming and could add to the Cross strength if stocks can rally. The BOJ is expected to increase its own QE program next week.
The Sterling (GBP) in stark contrast to the Euro the GBP/USD held on to gains and kept creeping higher for most of the day. Back above 1.6100 the big move was on the EUR/GBP which dropped from 0.8150 to 0.8030. The catalyst for the strength was the Q3 GDP which came in strong at 1.0% vs. 0.6% q/q. Looking ahead, November GFK Consumer Confidence forecast at 5.9.
Australian Dollar (AUD) AUD/USD was strong rallying to 1.0390 before easing later in the US session from profit taking given the large rally over the last 2 days. Traders are looking to the next RBA meeting with a strong chance of a rate cut still on the table. Hotter than expected inflation data this week has underpinned the rally higher with some analysts suggesting the RBA will wait rather than risk stoking inflation by cutting rates in November. Looking ahead, Japanese CPI forecast at -0.2% vs. -0.3% previously.
Oil & Gold (XAU) held above $1700 consolidating the recent losses and bouncing to $1715 by the close. OIL/USD consolidated the recent slump grinding back above $86 but very fragile still.
