Currency Updates:
U.S. Dollar Trading (USD) the news over the weekend that up to E100bn of loans was being set up to bail out Spanish banks helped all risk assets surge higher on Monday. The EUR/USD is above 1.2600 and still strong going into Europe with the news investors have been waiting for slowly coming to fruition. Also over the weekend better than expected Chinese data has also helped Asian stocks rally. Looking ahead, little economic data today with only speeches from Fed Officials in the US scheduled.
The Euro (EUR) the Spanish Bank bailout should support the EUR/USD today but some traders may wait for a pullback to buy as the gap was quite large from Friday’s close to Monday morning’s open. Traders will be watching the response to the bailout plan on Spanish bond yields as to whether investors are pleased with the weekend developments. Many details of the bailout are yet to be discussed and will have large impacts on the market when announced.
The Japanese Yen (JPY) the USD/JPY is being supported just under Y80 from large gains in the Yen Crosses. The usual USD selling seen against the Yen has not eventuated today with the market now playing the Yen as the key safe haven currency. Strong resistance is seen at the Y80 but a break above may put a bottom in place and seen further gains quickly.
The Sterling (GBP) the GBP/USD is soaring with the rest of the market on Monday playing catch-up with other majors as traders have been cautious going long after so much selling in recent weeks. The EUR/GBP is hampering gains with the important cross moving to 0.8160 vs. below 0.8100 last week. Looking ahead, no economic data today.
Australian Dollar (AUD) the AUD/USD had a volatile past 24 hours trading with the large drop on Friday putting traders on the wrong side of the news over the weekend and we saw the market open up to test AUD/USD 1.0000. The outlook is mixed with technical and rate cuts points to lower AUD/USD but the risk appetite and strong Chinese data prompting gains. A close above 1.0000 will be needed to encourage more aggressive buying. Looking ahead, no economic data today.
Oil & Gold (XAU) Gold recovered from its large drop in Asia on Friday to gap above $1600 on Monday morning in confusing trade for the precious metal. The sentiment is very fragile and more volatility is expected around the $1600 level. OIL/USD is doing well above $85 surging so far in Asia but longer term outlook is mixed with global slowdown taking its toll.
