Currency Updates:
U.S. Dollar Trading (USD) trading was very quiet on Monday ahead of the Bank of Japan rate meeting today. A lot of the sharp equity rally in recent weeks has been on the back of promises from the new Japanese PM to weaken the Yen. Another reason for the lack of movement was that US traders were away for Martin Luther King Day. Looking ahead, Existing Home Sales forecast at 5.09m vs. 5.04m previously.
The Euro (EUR) The EUR/USD went into a coma overnight with trader sitting on the sidelines ahead of the BOJ decision. EUR/JPY is a key cross for the major and has been extremely volatile in recent weeks. More of the same is expected after the decision with Y120 key short term resistance. Germany’s central bank overnight was upbeat on 2013 prospects.
The Japanese Yen (JPY) USD/JPY is receiving attention as the BOJ meet and could announce fresh measures to weaken the yen and boost the economy through exports. While some BOJ members are against an inflation target others are happy to aggressively weaken the Yen which has been in a decades long uptrend.
The Sterling (GBP) continued to trend lower in light trade with the market remaining sour of the British pound. EUR/GBP broke above 0.8400 as the EUR/USD remained strong. Looking ahead, German ZEW economic forecast sentiment 12 vs. 6.9 previously. Eurozone EconFin meeting.
Australian Dollar (AUD) the AUD/USD is continuing to compress as range trading continues. A new trend is likely once the range is broken but the market is not giving many clues as to the next big story in the market with the exception of Yen which everyone is enjoying gains on. UPDATE BOJ Target Inflation 2%.
Oil & Gold (XAU) XAU/USD remained in a $5 range orbiting around the $1690 level. Oil continued to grind higher breaking above $96 for fresh trend highs.
