Currency Updates:
U.S. Dollar Trading (USD) the USD gained heavily Friday with the 10yr US Treasury yields moving higher showing market expectations interest rates will increase faster than the Fed is currently indicating. US economic data was mixed with increases to February Personal spending countered by a drop in March Chicago PMI. A massive week of data is ahead with both US Nonfarm Payrolls and ECB interest rate meetings potential game changers. Looking ahead, March PMI Manufacturing forecast at 53 vs. 52.4 previously.
The Euro (EUR) the EUR/USD was strong but quiet in a 50 pip range above 1.3300 failing to retest 1.3380. The market is torn as to future direction with the USD strength countering the post Eurozone Debt Crisis Euro recovery. The ECB meeting this week will be critical for the central banks outlook as over the weekend they expanded the EU bailout fund to the 1trn to further sure up confidence. A break of 1.3380 will open up the 1.3500 multi-month resistance.
The Japanese Yen (JPY) the USD/JPY rallied sharply on Friday reacting to the USD yield change and surging to Y83. The Japanese central bank (BOJ) is trying to stress to the market it will be holding rates low for the longest time going forward but the USD/JPY rally has stalled recently and we may need stronger US data to push the major higher still.
The Sterling (GBP) the GBP/USD broke 1.6000 in a bullish move going into European trade on Friday but failed to hold the level into the weekend as profit taking and USD strength dragged the major lower. GBP/JPY stuck between Y130 and Y133 and looking to break above higher if stocks continue to rally. Looking ahead, March EU PMI forecast at 48.1 and UK PMI forecast at 50.7 vs. 51.2 previously.
Australian Dollar (AUD) the Official Chinese PMI released of the weekend saw the sharpest expansion in 12 months at 53.1 but this is in stark contrast with the private survey showing a contraction in March. Analysts are skeptical and although we opened up over 1 cent higher the price action post open in Asia so far has been one way selling. The RBA meeting tomorrow is expected to be a hold but if the statement is dovish the recent downtrend may be extended this week.
Oil & Gold (XAU) Gold was quiet in a $10 range between $1660-70 and closed at the top end. Oil rallied to $104 in the US session before plummeting to below $103 in aggressive trade.
