Currency Updates:
U.S. Dollar Trading (USD) the Dollar was sold late in New York overnight with US stocks soaring to fresh year highs after positive comments from FED Chief Bernanke and ECB Chief Draghi helped strengthen risk appetite. Fed Chairman Bernanke downplayed disunity inside the central bank and endorsed Japanese efforts to end deflation and return the Japanese economy to steady growth. Looking ahead, US Prelim GDP forecast at 0.5% vs. 0.1%. Weekly Jobless Claims forecast at 361k vs. 362k previously. Also Chicago PMI forecast at 54.6 vs. 55.6 previously.
The Euro (EUR) the market seized on the Bernanke testimony to surge above a 1.3100 and 1.3120 and we are moving higher in Asia as the short squeezed continued. The EUR/JPY is driving the market higher with the extremely volatile cross tracking the USD/JPY surge. Solid Italian bond auctions last night underpinned the move higher. ECB Draghi commented that the ECB was nowhere near ready to exist loose monetary policy.
The Japanese Yen (JPY) the market responded aggressively to the Bernanke endorsement of the Japanese monetary losing plans and we have USD/JPY and the Yen crosses all break above resistance and threaten to resume there longer term uptrends. EUR/JPY is back above Y121 and broke out of a consolidation wedge yesterday to the topside.
The Sterling (GBP) GBP/USD was range bound consolidating recent losses but unable to track the other risk assets higher. GBP/JPY was the main support and broke above Y140 in Asia today after the Bernanke led Yen selloff. Looking ahead, February German Unemployment Change forecast at -5 vs. -16. February Unemployment Rate forecast at 6.8% vs. 6.8% previously.
Australian Dollar (AUD) was under pressure for most of the day but when the sellers failed to kick lower after breaking through 1.0200 we rebounded to 1.0230. The market was caught short today and we have seen a sharp rally to 1.0280 even with some weak Q4 CAPEX numbers from last year. Once again the Yen cross AUD/JPY was the main source of support and we are back at Y95 after testing Y93 overnight. Update Q4 Australian CAPEX at -1.2% vs. 1.0% forecast.
Oil & Gold (XAU) Gold pared recent gains after Bernanke talked about the need to examine the exit strategy sometime soon and traders seemed to ignore the comment that QE3 would be in place for some time yet. OIL/USD grinded higher back above $93 a barrel and threatening to move higher in Asia as sentiment and global stock markets soared.
