Currency Updates:
U.S. Dollar Trading (USD) negative sentiment for most of the trading day was reversed in the US session after October Retail Sales came in at 0.5% vs. 0.3% forecast m/m. This is the fifth month that retail sales have come in positive and show the US economy from a consumption point of view is not as weak as some first thought. Some banks upgraded their expectations of Q4 GDP after the figures were released. In US stocks, DJIA +17 points closing at 12096, S&P +6 points closing at 1257 and NASDAQ +28 points closing at 2686. Looking ahead, October CPI forecast at 0.0% vs. 0.3% previously. October Industrial Output forecast at 0.4% vs. 0.2% previously.
The Euro (EUR) Italian debt spiked above 7.0% and the EUR/USD fell to 1.3500 on reports on new Italian PM struggling to gain consensus on new austerity measures. The Market bounced in the US session as stocks reversed direction and sentiment improved on solid US economic numbers. The crisis is not over but the ECB is supporting the bond market stopping things from getting out of control and the Euro crashing. Looking ahead, October CPI forecast at 3.0% y/y unchanged from last month.
The Japanese Yen (JPY) the USD/JPY spiked in the Asian session to Y77.50 as the market spooked the BOJ was intervening. The major trade back to Y77 very quickly after no confirmation came out and the pair spent the rest of the day in a tight range. EUR/JPY is adding to the downside pressure on most crosses and if things unravel in the Eurozone the BOJ may have to intervene to stop Yen strength. Looking ahead, BOJ Rate Announcement forecast to hold at 0.1% vs. 0.1%
The Sterling (GBP) October CPI fell to 5.0% vs. 5.1% forecast and allowed the GBP/USD to ease with the Euro down to a new support at 1.5800. The pound will follow the Euro direction but at a slower pace with EUR/GBP currently falling as the Eurozone debt crisis rolls on. EUR/GBP tested the 0.8520 level but closed unchanged near 0.8560. Looking ahead, October Claimant Count forecast at 20k vs. 17.5k previously.
The Australian Dollar (AUD) fell in sympathy with the Euro during the European session as Italian debt fears continued to cause risk aversion. The AUD/USD found support at 1.0120 and bounced back to opening levels as US data and stocks reversed direction. The Italian debt situation could cause the AUD/USD to test 1.000 but if confidence comes back then the Aussie will lead the market on the way back up.
Oil & Gold (XAU) Gold tested $1760 before rebounding to $1780 as buyers took control. Oil resumed its uptrend break back above $99 a barrel with US data supporting.
