Currency Updates:
U.S. Dollar Trading (USD) the Dollar remained strong overnight with most markets consolidating and pulling back from recent highs. EUR/USD was on the back foot sold to 1.3500 supports and GBP/USD and AUD/USD led the market lower with both making fresh trend lows. Weekly Crude Oil came in near expectations at 2.6m barrels ad allowed OIL/USD to rally off $95 support aggressively. Looking ahead, Weekly Jobless claims forecast at 360k vs. 368k previously.
The Euro (EUR) came under pressure as verbal sparring between France and Germany over the current exchange rate of the Euro intensified. The EUR/USD spiked initially after a comment from Germany that the Euro isn’t overvalued. This was short-lived as France put the EUR/USD on the agenda at Monday’s Eurogroup meeting. Profit taking set in during the US session as traders book profit ahead of the ECB meeting today. Draghi’s press conference will be the main event today especially in regards to the recent Euro strength.
The Japanese Yen (JPY) was rejected from the strong Y94 resistance with many analysts suggesting that the path from Y94 to Y95 will be hard for the bulls and that consolidation of the recent gains would be needed first. We saw fresh profit taking sweep through the Yen crosses with EUR/JPY leading the market lower. Some attention is being given to the selection of the next BOJ Governor with each prospective candidate screened for these attitudes towards Quantitative easing (printing money).
The Sterling (GBP) the GBP/USD will be vulnerable to its own interest rate event risk today with the MPC meeting but widely forecast to stay on hold. Volatility may come from the future BOE Governor who will be speaking before the MPC and may offer his own view on the current UK monetary policy. Looking ahead, Future Governor Carney Speaks. MPC Forecast to hold rates at 0.5%. Also, ECB Interest Rate Meeting forecast to hold at 0.75% with attention on President Draghi’s press conference afterwards.
Australian Dollar (AUD) the AUD/USD broke through major technical support and out of its long term 1.0360-1.0620 range leading to many sell recommendations from FX technical houses and investment banks. The outlook is not clear however as demand from reserve managers from around the world continues to be found at each significant level. Last night we found solid support at 1.0300 and have so far failed to break this level in Asia on its third attempt. Update January Employment Change at 10.4k vs. 5k forecast.
Oil & Gold (XAU) Gold continued to trade it its recent $1660-$1685 range and closed near $1680 grinding back towards the key topside resistance. OIL/USD bounced off $95 to confirm the uptrend and close just under $97 resistance. Trend highs are just above at $98.20 and the major $100 is a naturally Bull target.
