Currency Updates:
U.S. Dollar Trading (USD) The USD gained heavily against the Euro but lost ground against the Yen with markets profit taking ahead of the G20 and some Weak European GDP Numbers. Weekly Jobless Claims came in at 341k vs. 360k forecast in a positive sign for the world’s largest economy. Many comments overnight regarding recent the Jawboning from Japan to Norway shows a world on the brink of currency war ahead of the G20. Looking ahead, January Industrial Production forecast at 0.2% vs. 0.3% previously. Also G20 meeting in Russia Begin.
The Euro (EUR) The Euro collapsed across the board after shock miss in the German GDP for Q4 started a large sell off in EUR/JPY. EUR/JPY had been enjoying a fast rally for the last 2 months and the shock of an EU Q4 GDP figure of -0.6% Q/Q sent the fast moving pair down 200 pips to Y124 support. Further losses are possible ahead of the G20 with traders cautious of any potential statements regarding Japans recent Yen losses.
The Japanese Yen (JPY) was in the headlines with a BOJ meeting where the outgoing Governor Shirakawa made the case for the recent monetary expansion to get the Japanese economy out of recession. The Market was stable until the European GDP shocks sent the EUR/JPY and the USD/JPY back plummeting to fresh week lows.
The Sterling (GBP) Heavy EUR/GBP selling help slow the GBP/USD losses overnight where the market found support at 1.5480 before stabilizing at the figure. GBP/JPY selling has accelerated however and so the major is likely to continue to be under pressure with a significant change in market mood. Looking ahead, January Retail Sales forecast at 0.5% vs. -0.1% previously. Also December European Trade Balance forecast at 13bn vs. 13.7bn.
Australian Dollar (AUD) the AUD/USD tried to break the key resistance again at 1.0370 but failed to breach the strong level and has been in a range between 1.0360 and 1.0340 for the past two trading sessions. The recent selling has been due to EUR/AUD buying and so when that reversed aggressively last night we saw support from the cross in the major. Looking ahead, G20 meeting to affect the Yen directly if they mention Japan Explicitly.
Oil & Gold (XAU) Gold continued to be under pressure with support found near $1630 in Asia. OIL/USD remained supported on dips near $97 before stabilizing and closing $97.40.
