Currency Updates:
U.S. Dollar Trading (USD) the USD broke key resistance against most pairs overnight as the Spanish banking crisis nears a tipping point that could see the whole Eurozone spiral into deep recession. The Spanish government is reluctant to accept an EU bailout with the oversight seen as threatening the sovereignty of the large European nation.Looking ahead, Weekly Jobless Claims forecast at 370k vs. 370k previously. Q1 GDP forecast at 1.9% vs. 2.2%.
The Euro (EUR) the deepening Spanish crisis is reaching a critical stage where the fate of the union is now in the hands of EU officials in the next few weeks. Spanish bond yields crept to 6.7% and analysts suggest the 7.0% level is where panic will enter the bond market and heavy selling may be seen. Focus is on the EU leaders for concrete action to bring some confidence back into the market. Fresh year lows near 1.2350 were seen before we stabilized.
The Japanese Yen (JPY) the USD/JPY is under pressure as the Yen cross complex collapses with EUR/JPY near record lows and the AUD/JPY being liquidated by margin accounts in Japan. The USD/JPY support at Y79 has broken in Asia and it hard to see where exactly the Japanese Government might intervene either verbally or physically.
The Sterling (GBP) the heavy selling on the EUR/USD transferred over to the GBP/USD which also fell heavily down below 1.5500 and looking weak technically. The EUR/GBP is remaining near the 0.8000 level with the big figure acting like a magnet in recent trading sessions. Looking ahead, April German Retail Sales forecast at 0.0% vs. 0.8% previously. May German Unemployment change is forecast at -5k vs. 19k previously.
Australian Dollar (AUD) weak retail sales in April yesterday set the ball rolling and we saw large losses under 0.9800 to test 0.9700 by the end of the US session. Year lows are right under 0.9700 and support is seen at 0.9660 and then 0.9500. Risk off trading and expectations the RBA will cut rates again next week is providing continuous selling pressure. Update Q1 CAPEX at 6.1% vs. 4% forecast.
Oil & Gold (XAU) Gold fell in Europe before staging a sharp rally later in volatile trade closing at $1560. OIL/USD broke $90 a barrel and continued to fall to $88.
