Currency Updates:
U.S. Dollar Trading (USD) the Dollar was sold across the board even with soggy US stocks as the ‘fiscal cliff’ negotiations continued and little progress being made. The Bank of Canada held Interest Rates at 1.0% as widely expected. The EUR/USD rally is lifting most currencies higher with the tide turning against the USD. Looking ahead, November ISM Manufacturing forecast at 53.5 vs. 54.2 previously. Also ADP Employment Report forecast at 125k vs. 158k previously.
The Euro (EUR) broke above 1.3100 and is nearing a key resistance at 1.3140-80 (Oct 17 High) where the bears are expected to make a stronger stand. Tail risk is the scenario where the Eurozone breaks up or a country defaults on debt. There has been a significant drop in the tail risk out of Europe over the last month with progress being made on crises out of Greece and Spain.
The Japanese Yen (JPY) USD/JPY pulled back to Y82 in quiet trade with buyers waiting for support given the recent run higher from Y80. EUR/JPY bounced along the Y107 level and is once again on the march higher in Asia Wednesday.
The Sterling (GBP) was contained to a 50 pip range around the 1.6100 level and was left behind by the EUR/USD rally. EUR/GBP has taken advantage of the recent underperformance of the GBP and is now approaching at 0.8150. Looking ahead, October Retail Sales forecast at -0.1% vs. -0.2% previously.
Australian Dollar (AUD) The AUD/USD was in play yesterday with a cut by the central bank (RBA) of 0.25% to bring the Interest rate to 3.0%. The rates are now as low as the 2009 Crisis levels but the AUD/USD was not sold aggressively in fact we have seen buyers yesterday push the commodity pair to fresh month highs. UPDATE Australian Q3 GDP at 0.5% vs. 0.6% previously Q/Q.
Oil & Gold (XAU) Gold was bizarre overnight falling $20oz to break key $1700 support and leave the technical picture in disarray. Falling Bond Yields in Europe have reduced the alternative investment demand for Gold. OIL/USD struggled with US stocks and gold’s fall. Support was found under $88.
