Currency Updates:
U.S. Dollar Trading (USD) the market volatility continued overnight with the GBP/USD crashing to fresh trend lows and EUR/USD rallying before some bearish remarks from Europe sent the single currency back to opening levels near 1.3450. Traders will be watching the BOJ closely today with the recent Yen weakness surely to be a main talking point at the meeting. Looking ahead, Weekly Jobless Claims forecast at 360k vs. 366k previously. FOMC Members Tarullo and Bullard Speak.
The Euro (EUR) The EUR/USD was wacked around by rumors and negative reports out of Europe with talk that the ECB is worried about the effect of a strong Euro on the weaker countries in the region. The bullish outlook is being undermined by the constant jawboning with another report suggesting a major political party in Germany was against the ESM being used to recapitalize banks. Key Support is seen at 1.3370 on the daily.
The Japanese Yen (JPY) USD/JPY rallied off the Y93 level but profit takers capped at Y93.80 and we have seen the major and EUR/JPY fall back ahead of the BOJ today. Some expect the BOJ to pay lip service to global concerns about the recent Yen weakness ahead of the G20 meeting on Saturday. New FED Member George from the US spoke overnight was concerned about the size of the FED balance sheet and this helped 10yr US Bond Yields Rally and further support the USD/JPY this time from the USD side.
The Sterling (GBP) the GBP/USD was crushed lower by the BOE Governor Kings speech overnight. He commented that the limits of the monetary policy (cutting rates) leaves the door open for further stimulus (QE) in light of inflation. Cable hit 1.5550 throughout his speech and has continued to fall with little bounce to 1.5530 so far in Asia. Looking ahead, Q4 GDP Germany forecast at -0.5% vs. 0.2%. EU GDP forecast at -0.4% vs. -0.1% previously.
Australian Dollar (AUD) the Aussie was strong making a run at large stop above 1.0360 before finding the sellers camped just above the level and falling back 1.0340 in Asian trade today. The AUD/JPY and EUR/AUD are the main crosses moving daily with buyers on the AUD/JPY fighting the EUR/AUD uptrend sellers. Looking ahead, BOJ Rate Announcement forecast to hold at 0.1% but attention will be on the statement and press conference with outgoing BOJ Governor Shirakawa. UPDATE Q4 Japanese GDP forecast at -0.1% vs. -0.9% GDP previously Q/Q.
Oil & Gold (XAU) Gold’s attempted rally was stopped twice at $1654 before reversing to $1640. OIL/USD consolidated the recent gains testing and closing above the $97 support.
