Currency Updates:
U.S. Dollar Trading (USD) the Dollar was stronger overnight on the back of mild risk aversion ahead of the Key Jackson Hole Speech today. The market is expecting the FED chief to at least outline the range of options that the US central bank can implement if needed. Weekly Jobless improved to 347k vs. 370k previously. July Personal Income rose 0.3% as forecast. Looking ahead, August Chicago PMI forecast at 53.5 vs. 53.7 previously. Also FED Chairman Bernanke Speaks.
The Euro (EUR) the EUR/USD tested below 1.2500 after the Slovak PM stated on radio that the Eurozone was still 50-50 chance to break up. Support was found however and traders returned to focusing on the Spanish and Greece headlines. The IMF has confirmed that the Spain has not requested aid. The ECB meet next week and we may see more speculation on the ECB bond plan.
The Japanese Yen (JPY) USD/JPY fell below Y78.50 as the Crosses slumped further in Asia on Friday. EUR/JPY and AUD/JPY are testing the downside with US stocks now falling for the past week ahead of the Bernanke speech. USD/JPY will be one of the main pairs in play as the market reacts to US Monetary Policy speech today.
The Sterling (GBP) GBP/USD remained strong retesting 1.5850 before falling back to the now familiar 1.5800 range. Cable will follow the EUR/USD broadly with the fate of the two European currencies intertwined due to close trade relationships. Looking ahead, August Nationwide House Prices forecast at 0.0% vs. -0.7%. Also July German Retail Sales forecast at 0.2% vs. -0.1% previously.
Australian Dollar (AUD) the AUD/USD is weakest currency in the market with fresh daily lows in the market as the China slowdown and drop in Iron Ore prices leads to further fears for the Australian economy. Support was seen at 1.0280 and we are now under the 200DMA at 1.0300. Bulls are looking for help from the Bernanke speech tonight with two weeks of selling putting them under pressure. Looking ahead, Chinese PMI on Saturday forecast at 50 vs. 50.1 previously.
Oil & Gold (XAU) Gold was quiet in a $10 range around $1660 with the risk event tonight traders will be waiting for clarification from the US FED Chief on the bond buying programs. OIL/USD broke below $95 as sentiment turned sour in the US session. Support was seen at $94 where we bounced and consolidated.
