Currency Updates:
U.S. Dollar Trading (USD) the market had a lot to digest on Friday with FED Chief Bernanke once again telling the markets US monetary policy will remain low for an extended period of time. The other big story in the markets was the signing into law of major budget cuts across the US economy that could potentially derail the recovery. US ISM Manufacturing forecast at 54.2 vs. 52.7 forecast. Looking ahead, FOMC Members Yellen and Powell Speak.
The Euro (EUR) the EUR/USD broke the key 1.3000 level going into the US session but support was found at 1.2966 and we bounced back above the figure after EUR/JPY soared into the close. The market has been consolidating so far in Asia but the trend is lower and the 200Day moving average is at 1.2850. The situation in Italy is still unresolved and adding uncertainty to the market helping the sellers remain in control.
The Japanese Yen (JPY) USD/JPY opened strong in Asia after soaring on Friday on rumors that the BOJ was going to hold an emergency early meeting with the new Governors and potential aggressive easing to continue the Japanese recovery. EUR/JPY and GBP/JPY bounced as well but have been a source of weakness and volatility over the last two weeks.
The Sterling (GBP) The GBP/USD was similar to the EUR/USD breaking a key big figure at 1.5000 but bouncing into the close and consolidating in Asia so far. The market is aggressively bearish on the Pound and could fall significantly further with the Bank of England poised to continue its QE program. Looking ahead, UK February Construction PMI forecast at 49 vs. 48.7previously.
Australian Dollar (AUD) in under pressure able to hold at 1.0200 last week but crashing lower today as new Chinese property measures sent the shanghai stock index sharply lower. The 1.0150 key support was broken and we are at 1.0120 and looking vulnerable as we enter the European session Monday. The RBA meet tomorrow and are unlikely to cut but the statement will be analyzed for clues as to future moves. Update January Building Permits at -2.4% vs. 2.8% forecast.
Oil & Gold (XAU) Gold was stable on Friday finding support at $1570 and closed slightly higher at $1575. OIL/USD continued to slip lower as Chinese growth concerns and US government spending cuts prompted demand side fears for 2013.
