Currency Updates:
U.S. Dollar Trading (USD) the market opened weak Monday morning but when support was found going into the European session at the major 1.3000 EUR/USD support we saw a market wide short squeeze. US stocks rallied and the USD was sold as the buyers were caught long in the safe haven. March Retail sales showed signs of life up 0.8% vs. 0.4% forecast m/m. Looking ahead, US March Housing Starts forecast at 1.0% vs. -1.1% previously. Also Bank of Canada Interest Rate Decision forecast to hold at 1.0%.
The Euro (EUR) the EUR/USD tested 1.3000 twice before buyers took control and we saw a sharp rally back to 1.3150 even as the mood in debt markets continued to show Spanish debt fear. The outlook is mixed with a clean break of 1.3000 needed soon or the market will begin to ignore the European debt crisis and focus on stock markets for direction.
The Japanese Yen (JPY) the USD/JPY slumped in Asia as the Yen crosses fell sharply led by the EUR/JPY. The mood improved in the European and US sessions but the USD/JPY finished at day lows with an Y80 test likely in coming days. BOJ officials are expected to be vocal and we may see semi-official at the level buying to slow the decent
The Sterling (GBP) struggled to take advantage of the EUR/USD short squeeze with the EUR/GBP also moving higher which capped the major’s gains. The Outlook is for more range trading and potential downside if the situation in Spain deteriorates rapidly. Looking ahead, German April ZEW Survey forecast at 20 vs. 22.3 previously.
Australian Dollar (AUD) the AUD/USD hit day lows as the EUR/USD tested 1.3000 before reversing with the major’s short squeeze. Traders sold into the rally though which was capped at 1.0380 and we are once again coming under selling pressure going into Tuesday Asian trade. The outlook is for more losses as the slowdown in China becomes more prevalent. Looking ahead March RBA meeting minutes released.
Oil & Gold (XAU) Gold was mixed pivoting the $1650 level consolidating the recent rally.Oil selling came in hard at the start of the US session but the market found support at $102 and we reversed closing above $103.
