Currency Updates:
U.S. Dollar Trading (USD) The mood in the market started to turn sour in the European session as rumors of Italian and Spanish bank downgrades weighed. Also hurting was the jump in EU unemployment rate to the highest in the Unions history. The US session saw more risk off after the April ADP employment reports showed only +119k vs. 209k previously and is a worrying sign for Friday’s report. Looking ahead, Weekly Jobless Claims are forecast at 380k vs. 388k previously. Also, April ISM Services forecast at 55.5 vs. 56 previously.
The Euro (EUR) the EUR/USD was sold going into the European session as Italian PMI shocked to the downside and rumors of bank downgrades swept through the market. Support at 1.3160 was broken but the market did not fall far finding support at 1.3130 before stabilizing and recovering slightly.
The Japanese Yen (JPY) Held above Y80 but was very contained as the crosses came under pressure with EUR/JPY and GBP/JPY selling leading the way down. The BOJ and Japanese Government officials are trying to slow the downside with warning of intervention and more easing but the market is not really affected by such comments. The Nonfarm Payrolls on Friday is the major risk event for the month for the USD/JPY.
The Sterling (GBP) the GBP/USD fell below 1.6200 in risk off trade. Weak economic data did not help with April Construction PMI falling to 55.8 vs. 56.7 previously. GBP/JPY fell below Y130 and is continuing to challenge the bullish outlook for the major. EUR/GBP is remaining pressured down at 0.8125. Looking ahead, May ECB Rate meeting forecast at 1.0% vs. 1.0% previously. Also ECB President Draghi Speaks.
Australian Dollar (AUD) the AUD/USD tracked stock markets lower yesterday with the risk off trading pressuring the downside. Support under 1.0300 was quickly found but the bounce was limited. The RBA rate cut has had little continued effect on the AUD/USD with the market now looking to stock markets for direction. Looking ahead, no data from the Asia Pacific.
Oil & Gold (XAU) XAU/USD dipped below $1650 briefly overnight as the USD strengthened but we closed back above the level. OIL/USD fell with the rest for the market but found support at $105 and is quite calm lately.
