Currency Updates:
U.S. Dollar Trading (USD) consumer sentiment in the US unexpectedly improved to 64.2 vs. 61.5 previously and this helped improve strong investor risk appetite and push stock markets higher into the weekend. The USD was sold across the board as safe haven demand increased. In US stocks, DJIA +259 points closing at 12153, S&P +24 points closing at 1263 and NASDAQ +53 points closing at 2678. Looking ahead, no major data today.
The Euro (EUR) lots of developments are supporting the EUR/USD rally after the crash earlier in the week on Italy debt crisis with the main support the heavy ECB buying in the debt markets. Also supporting was the passing of austerity measures in Italy and the formation of a new government to be led by former EU commissioner Mario Monti. Looking ahead, September Industrial Production forecast at -2.2% vs. 1.2% m/m previously.
The Japanese Yen (JPY) USD/JPY is grinding lower as the Japanese Intervention fades into memory and the USD weakness remains prevalent. AUD/JPY and EUR/JPY took advantage of the strong stocks to move towards Y80 and Y106.50 respectively. There is talk the BOJ is still in the market smoothing and just trying to slow down the USD/JPY downtrend.
The Sterling (GBP) GBP/USD surged back above 1.6000 as the rally began in Europe and held into a tight range for the rest of the US session above 1.6050. EUR/GBP has been receiving a lot of attention since it broke lower with the Euro weakness but has since been quite content to range trade near the 0.8550.
The Australian Dollar (AUD) the sentiment towards the AUD had been very negative earlier in the week on the RBA cutting rates and the Italian debt crisis but the major factor for the Aussie direction is the stock market movement and they moved higher on Friday and dragged a reluctant AUD/USD higher. Traders are very cautious on going aggressively long at these levels until the situation settles down in Europe.
Oil & Gold (XAU) Gold pushed back higher on USD weakness heading back towards the $1800 level and target. Another good day for Oil heading towards $100 on WTI after breaking resistance at $99 a barrel.
