Currency Updates:
U.S. Dollar Trading (USD) the Dollar has enjoyed a good 24 hours of strength as risk aversion spreads from the Eurozone to global stock markets. Only Oil is bucking the trend with war drums growing louder for a military strike on Iran’s Nuclear facilities. The FOMC minutes also added more cold water on the recent QE3 talk with opinions within the FED widely differing on the need for more monetary stimulus.
The Euro (EUR) more rating downgrades from banks to countries in recent days are adding sustained pressure to the EUR/USD which is likely to test 1.3000 in coming sessions. The Greece situation is also continuing to linger with concern that the politicians lack the will power to continuing pushing through tough austerity measures to an already suffering population. Recent GDP data suggests Greece is now in the grips of a severe recession. In US stocks, Weekly Jobless Claims forecast at 365k vs. 358k previously. Also Fed Chairman Ben Bernanke speaks.
The Japanese Yen (JPY) the USD/JPY rally stalled at Y78.50 overnight with the crosses weighing on the major after heavy falls in EUR/JPY and AUD/JPY. The daily volatility is increasing on the Yen crosses and this is bringing more speculators back to the relatively quiet currency. The outlook for more Yen weakness will requires the stocks markets and risk appetite to pick up or the safe haven demand for Yen will trump the speculative carry trade.
The Sterling (GBP) was weak but only fell gently over the day as the Pound found support through the EUR/GBP cross which came back to life moving sharply back to 0.8300. GBP/USD is falling to 1.5650 support and bears are targeting 1.5500 in coming sessions.
Australian Dollar (AUD) the Aussie was bought up in Asia on news that china was looking to expand its investments in Europe. Sentiment weakened though later as the AUD/USD failed to break 1.0780 for a third time and stocks collapsed in the US session.
Oil & Gold (XAU) Gold was support on increasing Sovereign default risk and this allowed a small move higher on XAU/USD but a very large move higher on the important XAU/EUR cross. OIL/USD continued to trade higher on Iran nuclear posturing and more fear of strikes on its nuclear facilities.
