Currency Updates:
U.S. Dollar Trading (USD) the USD was strong in the Asian session as the surprise credit watch warning on European states hurt sentiment. The rest of the day saw sentiment improve with increasing expectations that the European leaders will do whatever is needed to get solve the debt crisis. In US stocks, DJIA +53 points closing at 12150, S&P +1 points closing at 1258 and NASDAQ -6 points closing at 2649. Looking ahead, Crude Oil Inventories forecast at -0.8mn vs. 3.9mn previously. Also October consumer credit forecast at 7bn vs. 7.4bn.
The Euro (EUR) the EUR/USD found support at 1.3360 and grinded higher for the rest of the day as the market continued to be optimistic. Q3 GDP was confirmed at 0.2% Q/Q and German Industrial Orders surged at 5.2% vs. 0.8% forecast. The outlook is positive as the leaders continued to say the right things to the market. EUR/GBP and EUR/AUD both rallied as the Euro outperformed. Looking ahead, October Industrial Output forecast at 0.4% vs. -0.7% previously.
The Japanese Yen (JPY) USD/JPY continued to range trade in a tight Y77.60 to Y77.80 range. EUR/JPY and GBP/JPY moved slightly higher and the AUD/JPY found support on its dip after the rate cut yesterday. The outlook for the Yen is still very closely linked to the stock markets and the US recovery.
The Sterling (GBP) underperformed the Euro as the market bought EUR/GBP which had been under pressure recently. The GBP/USD is struggling above 1.5600 but is very quiet as are most of the markets ahead of the EU summit and ECB/BOE meetings on Thursday. Halifax HPI fell -0.9% vs. 0.0% forecast m/m. Looking ahead, October Industrial Output forecast at -0.3% vs. 0% previously m/m.
The Australian Dollar (AUD) was sold aggressively after the central bank RBA cut rates to 4.25% vs. 4.5% previously. The market found support under 1.0200 and bounced back in Europe with stock markets rallying. The outlook is mixed with the Chinese story darkening and the Eurozone crisis still unresolved. Looking ahead, Q3 GDP forecast at 1.0% vs. 1.2% previously.
Oil & Gold (XAU) Gold was weak in Asia but found support at $1700 for a second time and bounced to $1730. Oil grinded back above $101 in quiet trade.
