Currency Updates:
U.S. Dollar Trading (USD) even though FX markets were open the important London markets were closed and many stocks markets remained closed. Better than expected Chinese PMI released on Monday saw December PMI upgraded to 50.3 above the 50 expansion level and has helped improve risk appetite. Looking ahead, FOMC Minutes Released and December PMI Manufacturing forecast at 53.2 vs. 52.7 previously.
The Euro (EUR) the Euro kept to a 50 pip range with slow movement for most of the day. The ongoing Eurozone debt crisis is still the main story in the markets and more debt auctions this week could set the tone for the rest of the week and month. EUR/JPY broke below the key Y100 level as the USD/JPY slumped and is pulling the EUR/USD lower. Looking ahead, December Employment Change forecast at -10k vs. -20k previously. The Unemployment rate is forecast unchanged at 6.9%.
The Japanese Yen (JPY) the heavy selling on Friday say the major open below Y77 and this continued to the be the level the pair stayed at for the entire trading day. The market will be watching closely for comments from Japanese companies and politicians about the strength of the EUR/JPY with the major trading partner slipping below Y100 and has moved down from Y170 highs 3 years ago.
The Sterling (GBP) a rally above 1.5500 on Friday was consolidated on Monday in thin trading with the UK markets closed. The Outlook is not mixed with the EUR/GBP having completed large moves lower and the Eurozone debt crisis no longer creating panic selling. If stocks were to rally then a move back to 1.5700 is very possible throughout the week.
The Australian Dollar (AUD) the AUD/USD continued to be supported on Monday after a move up to the top end of its recent range on Friday. The outlook is improving with China economic data not slumping as much as feared and the RBA signaling it does not have to cut rates on local economic factors alone. The key resistance on the topside is 1.0500 and will be the bulls target if 1.0300 breaks today after a strong opening on in Asia Tuesday.
Oil & Gold (XAU) Gold is rallying aggressively as the market bargain hunts from $1520 lows last week. OIL/USD Spiked above $100 a barrel on Tuesday morning with the reopen of the commodities exchange after Iran’s missile test over the weekend.
