Currency Updates:
U.S. Dollar Trading (USD) the Dollar remained on the front foot with economic data improving out of the world’s largest economy. December Durable Goods gained 4.6% vs. 1.7% previously. Interest rates responded immediately with 10yr Yields gaining above 2%. The FOMC meeting this week will be critical for traders and the US monetary policy outlook. Looking ahead, November Case Shiller house prices forecast at 5.5% vs. 4.3% y/y. Also CB Consumer Confidence forecast at 64.8 vs. 65.1 previously.
The Euro (EUR) the EUR/USD topped out at 1.3480 for a short term double top and we spent the rest of the day consolidating in a 50pip range. A lot of the movement came through EUR/JPY attempted Y123 in Asian morning Monday but was rejected and we fell back to Y122 which is supporting so far.
The Japanese Yen (JPY) is still the main currency pair in play with the major testing resistance above Y91 before easing back to Y90.50 support. Analysts suggest that the speed of the recent USD/JPY rise will need considerable time to work through overbought levels. Yen crosses are also overbought and had deeper corrections overnight but the general direction will be set by the USD/JPY.
The Sterling (GBP) the GBP/USD is in a solid downtrend and broke through a major support at 1.5690 overnight after the BOE Governor Carney spoke dovish at Davos. Continued government borrowing and weakening economic outlook has raised the chance that the UK may lose its AAA rating this year. EUR/GBP took advantage of the Pound weakness to hit fresh trend highs at 0.8570. Looking ahead, German GFK Consumer Climate.
Australian Dollar (AUD) the AUD/USD is entering a short term downside test with 1.0400 breaking overnight and 1.0380 hit before consolidating at the 1.0400. The market was thin due to Australia day. Looking ahead, NAB Business Confidence previously at -9.
Oil & Gold (XAU) Gold eased another leg overnight but the losses are slowing as we have fallen from $1695 to $1655 in the last week. OIL/USD is strong continuing to gain on US data and outpace the resurgent USD.
