Currency Updates:
U.S. Dollar Trading (USD) the EUR/USD pivoted the 1.2300 level but most other pairs lost ground against the USD which benefited from profit taking. The major risk event tonight is the US Interest Rate meeting where some change to the Federal Reserve monetary policy statement is expected but no change in the actually interest rate or current programs. Any real changes to FED programs are expected in September after the August Jackson Hole summit in which global central bankers meet to discuss future policy. Looking ahead, July ADP Employment Report forecast at 120k vs. 176k previously. Also July ISM Manufacturing PMI is forecast at 50.2 vs. 49.7 previously. Finally, US FOMC FED Rates forecast to remain at 0.25%. Also closely watched is the FOMC Statement released at the same time.
The Euro (EUR) The EUR/USD rallied in Europe after the French and Italian leaders released a statement that all steps will be taken to protect the Euro. This pushed the major up to 1.2320 and higher against most of its counterparts including the GBP and AUD both of which have been enjoying substantial gains against the Eurozone Currency in recent months.
The Japanese Yen (JPY) USD/JPY dipped below Y78 in Asian trade on Wednesday after Chinese PMI came in weaker than forecast at 50.1 vs. 50.3 on the official. EUR/JPY is below Y96 and holding ahead of the major risk events coming up. The USD/JPY we react to any changes in the US monetary policy tonight.
The Sterling (GBP) the GBP/USD fell from 1.5700 to lower 1.5600 after Moody’s reaffirmed its negative outlook on the UK credit rating. The EUR/GBP took advantage to rally up to 0.7850 and is in danger of a trend reversal after falling from 0.8500 to 0.7800. The FOMC and ECB are both going to be major events for the GBP and traders expect range trading. Looking ahead, July Nationwide House Prices forecast 0.0% vs. -0.6%. Also July UK PMI Manufacturing 48.5 vs. 48.6 previously. July EU PMI Manufacturing is forecast at 44.1 vs. 44.1 previously.
Australian Dollar (AUD) the AUD/USD rallied to fresh highs above 1.0540 before falling sharply to close below 1.0500 as profit takers took rare control. The outlook we rely upon the stock market’s reaction to the US Fed and ECB tomorrow. Also on the horizon is the US jobs on Friday and the RBA is next Tuesday expected to hold at 3.5%. Update Japanese Unemployment Rate at 4.3% in June vs. 4.4% previously.
Oil & Gold (XAU) Gold ran out of steam above $1625 and fell back to $1615 supports. OIL/USD fell back with the rest of the broader market to $88 after trading above $90 a barrel.
