Currency Updates:
U.S. Dollar Trading (USD) the USD gained heavily overnight after the release of the February FOMC Meeting minutes pointed to more members moving away from the QE3 support. A strong March Nonfarm Payrolls this Friday would help confirm this and add to the USD strength. Gold showed the biggest reaction with a big part of the bullish outlook related to continued QE from the US central bank this year. Looking ahead, March ISM Services forecast at 57 vs. 57.3 previously.
The Euro (EUR) the EUR/USD reversed to 1.3200 after the FOMC minutes with the recent rally stalling at 1.3380 and we will now look for support ahead of the ECB rate meeting tonight. EUR/JPY was more stable but is under Y110 still and will need to reclaim this to get some upward traction back.
The Japanese Yen (JPY) has a very close relationship with the US monetary policy with both countries at near 0% interest rates and both seen as safe havens. The FOMC minutes allowed a reversal on USD/JPY weakness which had tested support under Y82 earlier in the day to trade towards Y83.
The Sterling (GBP) disappointed the buyers who had bought above 1.6000 with the strong USD reversing the Pound back to 1.5900 and we could pull back further if the USD strength persists into the European session today. With the fresh high in place buyers will be cautious buyers this time around although GBP/JPY is still showing signs of strength and EUR/GBP is still pressuring 0.8300 support. Looking ahead,EU February Retail Sales forecast at 0.0% vs. 0.3% previously. Also German Industrial Orders forecast at 1.2% vs. -2.7% previously. Also, ECB Rate meeting tonight forecast to hold at 1.0% but focus on press conference afterwards.
Australian Dollar (AUD) the RBA held at 4.25% as widely expected yesterday but this did not stop selling pushing the pair lower with China slowdown fears still evident and rallies timid. The USD strength added to the push lower and we tested 1.0300 by the end of the day. UPDATE February Trade balance -480mn vs. -1000mn previously.
Oil & Gold (XAU) Gold crashed lower post FOMC falling to $1640 from $1680 earlier.Oil was calmer falling below $104 in quiet trade with US monetary policy not as important as global growth.
