Currency Updates:
U.S. Dollar Trading (USD) a quiet start to the week encouraged some profit taking and consolidation on most FX pairs. The USD was slightly weak on the day but the trend remains higher. Some FOMC members yesterday suggested that the FED should do more to help the economy but without specifics the market barely reacted. Focus remains on the Eurozone with yields remaining stubbornly high on Spanish and Italian debt. Looking ahead, No Economic Data Today.
The Euro (EUR) some supportive comments from ECB members and a lack of follow through on the downside prompted profit taking on Monday with the single currency closing above 1.2300. The outlook is still negative while bond yields remain high and the EU members ratify the new bailout and specifics of just how it will work are ironed out. Euro Crosses are receiving attention with EUR/GBP and EUR/AUD still oversold and some speculators are trying to pick the bottom.
The Japanese Yen (JPY) the USD/JPY kept to a very tight 25 pip range as the focus was on the other majors but some Yen crosses did grind higher. Traders are looking elsewhere for more volatility at the moment.
The Sterling (GBP) tracked the EUR/USD higher back above 1.5500 to 1.5530 resistances. Last week’s BOE moves have been priced in but there are still some downside risks. EUR/GBP targets 0.7900 but could bounce if the market changes mood on the EUR/USD. Also ahead, May Industrial Output forecast at -0.2% vs. 0%. May Trade Balance forecast at -9bn vs. -10.1bn previously.
Australian Dollar (AUD) the AUD/USD is the main risk currency in play this week with the daily China data releases and close scrutiny of the emerging economic powerhouse. AUD/USD found support at 1.0160 and grinded back above 1.0210. Looking ahead, June Consumer Confidence previously at 40.7. Also Chinese Trade Balance forecast at 21bn vs. 18.7bn previously
Oil & Gold (XAU) XAU/USD bounced recovering some of the losses from the previous 2 days back to $1590. OIL/USD fell sharply after Norway announced the strike was over and this should create some downside pressure on both Brent and Crude Oil. Key Support at $84.
