Currency Updates:
U.S. Dollar Trading (USD) risk appetite remains strong going into the US FOMC meeting decision today with stocks holding near multi week highs. The ECB/FOMC/China monetary policy loosening in recent weeks have really underpinned the global equity rally. Most economists expect the FED to announce a new round of QE and may communicate interest rates to remain on hold until 2015. Looking ahead, FOMC Rate Decision forecast to hold at 0.25% and begin QE3.
The Euro (EUR) the EUR/USD hit 1.2940 highs in Europe on the back of the positive German Court decision that allowed the funding of the ESM bailout facility. The good news was widely expected however and this allowed profit takers to gain control later in the day and we finished at 1.2900. The FOMC will be a big event for the EUR/USD with a potential d1.3000 test on the cards if the FED is more dovish than expected.
The Japanese Yen (JPY) USD/JPY stopped falling but was not able to reclaim the Y78 level in quiet trade. The main event risk for the week is the FOMC tonight with the bears hoping QE3 will allow the USD/JPY to fall further towards Y77. The US Bond reaction to the FOMC will be closely watched with a strong link to the USD/JPY direction.
The Sterling (GBP) the Pound was supported by the EUR/USD rally and strong local data. August Unemployment claims fell 15k and is a positive sign for the job sector. The Unemployment rate increased however to 8.1% as more people returned to looking for a job. Looking ahead, Q3 Swiss Libor Rate forecast at 0.13%.
Australian Dollar (AUD) the AUD/USD tested 1.0500 after the German Court ruling day highs and we have seen consolidation since then above the 1.0450 level. The AUD/JPY is struggling to take advantage of the strong stock market finding resistance at Y81.80. Looking ahead, RBA Governor Stevens Speaks. Update RBNZ hold Interest Rates at 2.5%
Oil & Gold (XAU) XAU/USD rocketed to $1746 before rolling over in the US session a falling back to $1730 supports. The FOMC will likely move the XAU/USD up/down at least $20oz if recent history is any guide. OIL/USD rallied to $98 but ran out of steam and fell back to $96.50.
