Currency Updates:
U.S. Dollar Trading (USD) a miss on the November US manufacturing PMI overnight prompted a pullback in stocks during the New York session but this didn’t translate into safe haven demand for the Dollar. Instead the market has taken the view that the weak US data will lead to more QE from the FOMC at next week’s meeting and more USD weakness as a result. November ISM Manufacturing at 49.5 vs. 51.7 previously. Looking ahead, Bank of Canada Rate Decision forecast to hold at 1.0%.
The Euro (EUR) shot above 1.3000 to fresh multimonth highs just under 1.3080 after Spain formally requested aid for its banks and Greece successfully completed its bond buyback program. Bond Yields from Greece to Spain and Italy all dropped dramatically and suggest further topside for the single currency.
The Japanese Yen (JPY) USD/JPY came under profit taking pressure after failing to get above Y82.50 resistance and we have pulled back to Y82 in Asia so far. The US ISM fail combined with overbought Yen crosses to all pull back slowly. Friday’s US Nonfarm Payrolls is always a major USD/JPY mover with its impact on US monetary policy.
The Sterling (GBP) was strong advancing to 1.6100 tracking the Euro strength and reacting to better than forecast PMI manufacturing at 49.1 vs. 47.3 previously. GBP/JPY is finding resistance above Y132 but is still well supported on dips. Looking ahead, November UK Construction PMI forecast at 50.5 vs. 50.9 previously.
Australian Dollar (AUD) some weak November retail sales data yesterday saw AUD/USD back below 1.0400 but this was only temporary and we quickly moved back to 1.0430 ahead of the RBA decision today. The RBA is forecast to cut by 0.25% but this is widely publicized so the reaction should be limited. Looking ahead, RBA forecast to cut from 3.25% to 3.0%.
Oil & Gold (XAU) Gold rebounded to $1720 but stalled and closed on a weak footing near $1711 support. OIL/USD tested $90 a barrel before falling back on profit taking from the key level.
