Currency Updates:
U.S. Dollar Trading (USD) a deadly combination of profit taking and fresh political risk out of Europe saw heavy selling in Global stocks and a rush to the safe haven US Dollar. The main story sweeping the market was a Spanish corruption scandal and record unemployment levels in the beleaguered EU country. Also Italian politics are entering the fray with upcoming general elections. Looking ahead, January ISM nonmanufacturing forecast at 55.2 vs. 55.7 previously.
The Euro (EUR) the EUR/USD took the brunt of the selling pressure overnight plummeting to 1.3500 support after the yields on Italian and Spanish Debt jumped sharply. The market had been buying Euro for some time so a correction was due but the speed of the selling and the volume could prompt further profit taking. The Euro was sold on all the crosses as well especially on the EUR/AUD which had been enjoying a strong uptrend.
The Japanese Yen (JPY) USD/JPY hit fresh trend highs above Y93 but was sold aggressively from this point as profit takers took control and EUR/JPY fell from Y126.50 to Y124.80. The selling has continued in Asia but we have consolidated above Y124.50 going into Europe waiting fresh information on the political scandals and watching the reaction of the EZ Debt Yields. Uptrends on the Yen crosses are under threat across the board.
The Sterling (GBP) the GBP/USD got support from the EUR/GBP liquidation from 0.8700 down to 0.8560 and helped cable lift from 1.5700 to 1.5750. The GBP/USD has already been under pressure over the last few weeks so the market could not push lower but further European stock market jitters could lead to more losses ahead of the BOE on Thursday. Looking ahead, January EU PMI services forecast at 48.3 vs. 48.3 previously. Also UK January PMI forecast at 49.5 previously.
Australian Dollar (AUD) the AUD has had an interesting 23 hours trade able to defy the usual risk off selling flows as EUR/AUD liquidations help support but then pummeled in Asia after the RBA left the door open for further cuts in a surprising neutral statement after quite strong local economic data and strong performance of the local share market since the RBA last met. UPDATE Australian RBA hold rates at 3.0%.
Oil & Gold (XAU) Gold was supported on the spike in sovereign risk out of the EU overnight, able to gain towards $1675oz against the USD but also making heavy gains against the Euro. XAU/EUR received a lot of attention overnight soaring $20oz as the sovereign risk emanated out of the Eurozone itself. OIL/USD was sold with stocks from $97.50 to $96 with the chart now glaring a warning double top at $98 a barrel.
