Currency Updates:
U.S. Dollar Trading (USD) the USD was sold on Friday as the market reversed higher on the EUR/USD with talks that reforms in Spain were moving along quickly and traders were caught short when large buying emerged. July US Consumer Confidence fell to 72 but only marginally lower than the 73.4 forecast. The Fed’s Lockhart spoke on the conditions required to launch QE3 and stated more negative news would have to emerge but that the central bank would not have to wait if it did. Looking ahead, June Retail sales forecast at 0.1% vs. -0.2% previously. Also July NY Fed forecast at 0 vs. -0.4% previously.
The Euro (EUR) large buying spooked the shorts on Friday and we saw a sharp rally from 1.2170 to 1.2250. Strong US Stocks supported the move higher and closed near highs. The EUR/GBP and EUR/AUD showed that the Euro was still lagging however with both crosses dipping in the US session. The outlook this week will rely on EU countries passing the Spanish bailouts without major disruption.
The Japanese Yen (JPY) the US Dollar weakness meant the USD/JPY was under pressure for most of the day in the low Y79 region. The Yen crosses however all enjoyed solid gains with risk appetite improving in the US session. The downtrend in most crosses will be tested this week and depend on the Global stock markets.
The Sterling (GBP) The GBP/USD took advantage of the relief rally on Friday to push back above 1.5500 and on to 1.5570 with the traders quick to change their mood on the Cable lately. EUR/GBP pushed to fresh multi year lows under 0.7900 and is targeting a break of 0.7800 if the downtrend continues. Looking ahead, June EU CPI is forecast at 0 vs. -0.1% m/m.
Australian Dollar (AUD) the AUD/USD pushed back above 1.0200 and caught the market on the wrong side after the large sell off seen after June’s weak Jobs data last week. The outlook is for more gains with the support on dips been relentless lately.
Oil & Gold (XAU) Gold was pressured lower with the USD strength beating safe haven demand from weak European bonds. Support is seen at $1564 and $1550. OIL/USD was strong bucking other assets to rally to $86 a barrel.
