Currency Updates:
U.S. Dollar Trading (USD) gave up gains from the previous day of trading post China&rsquo s surprise rate hike, as the majority of the market interpreted that the decision to increase rates for the first time since December 2007 was a precursor to positive GDP and CPI reading on Thursday at 0200 GMT. Market perception of positive global growth led by China, coincided with a rally in equities and commodities. In US Share markets, the Dow Jones rose 129.35 points (1.29%), S& P up 15.7 points (1.03%) and the NASDAQ also rose by 20.44 points (0.84%). In domestic news, the Beige book indicated that economic activity had expanded (albeit moderately), however growth in the work force was still being crimped by a soft economy. On Thursday, focus shifts to China data due during the Asian session with GDP, CPI, Retail Sales, and Industrial Production. In the US weekly jobless claims and Philly Fed are out.
The Euro (EUR) regained most of its losses on Wednesday as positive investor sentiment lifted the Euro back to pre-China rate hike levels. In domestic data, German PPI rose 0.3% in September slightly above expectations. The EURUSD traded with a low of 1.3699 a high of 1.3991 before closing the day at 1.3950. German PMI scheduled for release on Thursday.
The Japanese Yen (JPY) with little data released, the USDJPY pair was once again was subdued playing second fiddle to the EUR, AUD and XAU. The Japanese Yen traded at 15 year highs once more versus the dollar, but failed to break through on the down side. The USDJPY traded with a low of 80.85, a high of 81.66 before closing the day at 81.13
The Sterling (GBP) also pushed higher on Wednesday on a return to risk, although the upside move was limited as the BoE minutes hinted that policy makers were leaning towards further QE. The UK Government unveiled significant austerity measures as well, by raising the retirement age and cutting 490 K public sector jobs. The GBP traded with a low of 1.5655 a high of 1.5878 before closing the day at 1.5831. UK Retail Sales set for release on Thursday.
The Australian Dollar (AUD) rebounded well, in anticipation of buoyant release of China data on Thursday. The AUD traded at a low of 0.9665 a high of 0.9889 before closing the day at 0.9859
Oil & Gold (XAU) XAU also did well to take advantage of positive investor sentiment, ending the day up US$8.40 an ounce to close at US$1,344.40, whilst Oil also rose further aided by inventories coming in at 0.7 million barrels, short of the 1.5 million forecast. As a result Oil closed up US$2.28 a barrel to trade at US$81.77 last
