Currency Updates:
U.S. Dollar Trading (USD) the USD gained overnight as the negative European weekend press caused risk aversion and a global stock market sell-off. Some concern is that the failure to pass a Budget in the Netherlands could lead to the large European Country being downgraded from its AAA status. Looking ahead, February Case Shiller forecast at -0.6% vs. -0.8% m/m. March New Home Sales forecast at 0.32mn vs. 0.313mn previously.
The Euro (EUR) French election concerns added to the fresh Dutch AAA ratings risks causing the Friday Rally to reverse to 1.3130. The EUR/GBP fell to new lows near 0.8150. The EUR/JPY fell back aggressively from Y108 and found support at Y106.50. The outlook is mixed with the bounce off 1.3000 failing to get far and Spanish/Italian bonds still remaining under pressure.
The Japanese Yen (JPY) the USD/JPY is looking heavy as the EUR/JPY and AUD/JPY pull it lower but the market is expecting to find solid support under Y81. The Yen is a safe haven and will be following the stock market until Wednesday’s US FED Interest rate meeting.
The Sterling (GBP) the GBP/USD continued to be the strongest risk currency in the market hardly pulling back at all and saw the pair close above 1.6100 and at new highs against the Euro. The market is looking to press higher with GBP/JPY buying quite strong and holding above Y130. Also ahead, March Public Sector Debt forecast at 14.4bn vs. 12.91bn previously
Australian Dollar (AUD) Has been under pressure from the global stock market fall but the biggest hit came from Q2 CPI which shocked at 0.1% vs. 0.6% Q/Q. The weak inflation certainly almost confirms the RBA will cut next Tuesday and will be a constant source of AUD weakness going into the event. Looking ahead, RBNZ Rate meeting forecast to hold at 2.5%.
Oil & Gold (XAU) Gold fell sharply to $1625 but found support and finished mixed close to the key $1640 level. OIL/USD fell over $2 a barrel with the fall in European and US stocks reversing Friday’s rally.
