Currency Updates:
U.S. Dollar Trading (USD) the positive mood from the Greece vote faded quickly and we ended well off highs in the US session and the Dollar was on the front foot going into Asia Tuesday morning. When Moody’s downgraded most of Europe after the New York close the Dollar was bought aggressively across the board. The eventful Asian session then saw the BOJ expand its Asset purchase program and look to focus on a new inflation target.
The Euro (EUR) the 2 notch downgrade of Spain and 1 notch on Italy saw the EUR/USD test 1.3150 in Asia and break going into Europe on Tuesday. The Greece situation had only just started to stabilize and the new negative news may be too much for the recent rally to digest. In US stocks, DJIA +72 points closing at 12874, S&P +9 points closing at 1351 and NASDAQ +27 points closing at 2930. Looking ahead, January Retail Sales forecast at 0.7% vs. 0.1% previously. Also head, February German ZEW index forecast at -12 vs. -21.6 previously.
The Japanese Yen (JPY) the USD/JPY shot to Y78 after the BOJ announced a new inflation target for the central bank and government to aim towards a 1.0% annual and also expanded the Asset purchase program by 10 trillion yen to 65T Yen. The EUR/JPY and AUD/JPY failed to track the major however with the risk off trade capping gains.
The Sterling (GBP) the Moody warning added to the technical failure overnight and sent the GBP/USD back below 1.5700 at the time on writing with the focus back on the downside. The failure of the EUR/USD and the GBP/USD to break key resistances in the last week has threatened to halt the uptrend both have enjoyed lately.
Australian Dollar (AUD) the AUD/USD was leading the market lower in Asia after the downgrades with last Friday’s low at 1.0640 the next support to be tested if Europe pushes lower. The Jobs data on Thursday is the next key risk event. Looking ahead, January UK CPI forecast at -0.5% vs. 0.4% previously.
Oil & Gold (XAU) Gold failed at $1734 resistance and fell back under $1720 into the US close. OIL/USD bucked the trend of the rest of the market with Iran tensions rising once again with bomb threats to Israeli embassies.
