Currency Updates:
U.S. Dollar Trading (USD) the Dollar strengthened as Commodities slumped led by Gold and Oil reacting to further talk the US might release strategic reserves to help lower Gas prices. Stocks also pulled back and added to the softer investor sentiment. US Durable Goods rose 2.2% vs. 3.7% previously. Looking ahead, Q4 GDP forecast at 3%. Weekly Jobless Claims forecast at 350k vs. 348k. Fed Chief Bernanke Speaks.
The Euro (EUR) the EUR/USD tested support under 1.3300 overnight but rebounded and closed above the key level opening the way for more topside. EUR/GBP moved higher and EUR/AUD soared up to fresh month highs with risk sensitive cross unwinding in the Euro’s favor.
The Japanese Yen (JPY) the USD/JPY pivoted around the Y83 level but ended at the day lows with crosses led by the AUD/JPY pulling the major lower on safe haven demand. The USD/JPY moves in relation to the US Bond Yields in particular the 2 year which reacts to changes in US monetary policy expectations.
The Sterling (GBP) the main reason for underperformance in the GBP/USD overnight was the shock revision low of Q4 GDP down -0.3% vs. -0.2%. This dropped the y/y GDP to 0.5% and adds to the case further QE may be warranted at next week’s BOE meeting. Looking ahead, February UK Mortgage approvals forecast at 59k vs. 58.7k previously. Also March German Unemployment Change forecast at -10k vs. 0 previously.
Australian Dollar (AUD) the AUD/USD is struggling to hold ground with the constant focus on China growth affecting sentiment and creating a new downtrend. Overnight the 200 day moving average was broken and we closed underneath. This is a classic sign of a fresh longer term trend and very disconcerting for those who built up longs earlier in the year.
Oil & Gold (XAU) Gold fell for a second day back to $1760 support before bouncing and consolidating just above the key support. Oil was the biggest mover crushed lower after talk the US is considering releasing strategic reserves and the Iran story started to lose its fear value.
