Currency Updates:
U.S. Dollar Trading (USD) in a very important trading day we saw large selling in US stocks post FOMC Minutes overnight as a ‘number’ of FED members expressed concern at the potential risks for further Asset purchases (QE). Some members suggested a halt to QE3 Purchases ‘before’ the US labor market improves. Also of concern overnight January Housing starts plummeted -8.5%m/m. Looking ahead, Weekly Jobless Claims forecast at 355k vs. 341k previously. Also January CPI forecast at 1.6% vs. 1.7% y/y. Also ahead Flash Manufacturing PMI forecast at 55.5 vs. 55.8.
The Euro (EUR) the EUR/USD was crashed lower overnight in a very bearish technical move with the FOMC minutes adding to selling pressure from concern over France’s Budget and potential Cyprus downgrade. Also sweeping the market was rumors of a large commodity house in trouble as Gold plunged. No substance has come of the rumor so far and is more likely a story to fit the large gold moves. Risk was off though and EUR/JPY led the market lower.
The Japanese Yen (JPY) The USD/JPY came under pressure after shooting higher on the FOMC minutes with EUR/JPY dragging the major lower. The whole Yen complex may strengthen as a traditional safe haven is stocks correct as possible from the large falls in US stocks and the change in FED tone towards aggressive QE in future.
The Sterling (GBP) fell sharply for most of the day down over 200 pips and hitting 1.5200 in the Asian session so far. The market was already bearish on the Pound and the change in risk sentiment has added to the selloff. GBP/JPY and GBP/AUD and EUR/GBP are all threatening new lows against their respective currencies. UK Unemployment Rate increased to 7.8% vs. 7.7% previously. Looking ahead, France Manufacturing Survey forecast at 44.5 vs. 43.6. German Manufacturing forecast at 55.5 vs. 55.7 previously. February EU manufacturing forecast at 49 vs. 48.6.
Australian Dollar (AUD) the AUD/USD sell off from 1.0370 was aggressive and tracked the gold plunge with the commodity linked currency falling to 1.0250 by the end of the US session. Strong stock market selling in Asia today and no AUD bounce has led many to see a retest of 1.0230 range support and perhaps break to parity if global stock markets enter a correction. Looking ahead, RBA Governor Stevens speaks before Parliament.
Oil & Gold (XAU) Gold broke $1600oz and we saw heavy selling to $1560oz. The selling has continued to $1555 in the Asian session as the full impact of the FOMC minutes continues to directly impact the precious metal. OIL/USD crashed from above $97 straight through $95 range support and we continued on to lower $94.30 by the end of the US session.
