Currency Updates:
U.S. Dollar Trading (USD) company earnings from the US are becoming more important with most beating estimates overnight with the notable exception of Apple which has fallen 10% in after hours trade so far. Dow Jones still managed small gains however with the US house passing a vote to suspend the debt ceiling until May. Also the IMF downgraded its 2013 forecast for both global and developed countries. Looking ahead, Weekly Jobless Claims are forecast at 359k vs. 335k previously.
The Euro (EUR) the EUR/USD failed to break free of the 1.3300 orbit and we fell from 1.3350 to 1.3270 in the US session before stabilizing and closing at the familiar 1.3300 figure. EUR/CHF has been noted as a major source of the Euro selling which fell from 1.2400 to 1.2320. The outlook is mixed with the recent rally struggling for fresh gain but not really much selling interest either with risk appetite and stocks remaining near highs.
The Japanese Yen (JPY) USD/JPY and the Yen crosses all dipped overnight but found support before bouncing back to opening levels in a good day for the Bulls hoping that the correction was nearing completion. Caution is still needed however with comments from Global policymakers increasingly becoming more and more protectionist. The 10% weakening in the Yen since the new measures announced by the new PM may inspire other world leaders to announce similar measure in their home countries.
The Sterling (GBP) is under pressure being sold on rallies and in danger of further losses on most of the GBP crosses with GBP/AUD at 1.5000 overnight. Sentiment towards the Pound is souring because of the MPC signaled intent to expand their QE if the economy continues to stall. The MPC minutes overnight confirmed this with 1 member actually voting for an expansion at January’s meeting. Governor King also commented on the relative strength of the sterling. Looking ahead, January MPC minutes forecast at 9-0 hold vote. Also November Unemployment Rate forecast at 7.8% unchanged from the previously month.
Australian Dollar (AUD) The Aussie kept to its recent range like clockwork bouncing off 1.0530 after CPI came out more cooler than forecast at 2.25% vs. 2.4% y/y. The market has been unable to break out of the recent range for 3 weeks now and it might take the RBA in February to finally give the market a catalyst that break through. Looking ahead, January HSBC Chinese manufacturing PMI previously at 51.5.
Oil & Gold (XAU) Gold pulled back after failing to break above $1700 over the last week of trade. We may see more range trading but the risk is still to the topside as central banks all intensify their extraordinary easing measures. Oil suffered from heavy profit taking flows to close near $95.50 still above the key $95 level.
