Currency Updates:
U.S. Dollar Trading (USD) a stronger than forecast German ZEW survey sparked a rally that continued in New York with traders optimistic about the FOMC decision later today. US November Trade Balance at -42bn vs. 41bn previously. The market has now priced in dovish news from the FED and if this is not delivered a sharp spike in the USD is expected. Looking ahead, FOMC Decision forecast to hold at 0.25%. Focus will be on the FOMC Statement and Press Conference afterwards.
The Euro (EUR) the EUR/USD rallied up to 1.3000 closing above the key psychological level as traders sell the USD aggressively ahead of the FOMC and Eurozone fears fail to materialize. EUR/JPY in particular was strong up to Y107.30 and is well positioned to retest recent trend highs at Y108.
The Japanese Yen (JPY) USD/JPY was the only major where the USD gained ground with traders aggressively buying the Yen crosses and this lifted the major back to Y82.50. Traders are wary though because any USD weakness post FOMC tonight will directly affect the USD/JPY negatively. EUR/JPY and AUD/JPY are leading the charge higher on the Yen crosses.
The Sterling (GBP) Cable managed only a smaller rally back above 1.6100 but lagging the EUR/USD. EUR/GBP moved higher to 0.8000 and is an important cross to watch to gauge relative strength of the two majors. Looking ahead, German CPI forecast at -0.1% m/m. October EU Industrial Production forecast at 0.2% vs. -2.5% previously.
Australian Dollar (AUD)finally broke above 1.0500 and we have opened up a run to 2012 highs 1.0625 if investor appetite can remain upbeat. Recent Chinese data releases and easing Euro tail risks have created a risk on trading environment for the Aussie. EUR/AUD is still in play for the AUD bears but the outperformance of the AUD is still expected for the short term at least. Looking ahead, RBAGovernor Stevens Speaks.
Oil & Gold (XAU) Gold failed to take advantage of the USD weakness withdemand for the precious metal weak as demand for government bonds falls. OIL/USD spent the day in a $1 range between $85.30 and $86.30 but bulls will be happy the downside stopped if only for one day.
