Currency Updates:
U.S. Dollar Trading (USD) was strong on the back of renewed risk aversion in the Euro area banking sector overnight. Stock markets still managed small gains as economic data supported with factory orders gaining 1.8% vs. 1.7% previously. In US stocks, DJIA +21 points closing at 12418, S&P +1 points closing at 1277 and NASDAQ -1 points closing at 2648. Looking ahead, ISM Services PMI forecast at 53 vs. 52 previously. Weekly Jobless Claims are forecast at 375k vs. 381k previously.
The Euro (EUR) Debt concerns resurfaced after reports that Spain was looking for loans form the EFSF to recapitalize its banks. Also adding to the heavy selling EURO was the Italian Bank Unicredit which has looked to raise funds at a 43% discount from its current share price sparking a 15% slump in the stock yesterday. Looking ahead, October Industrial Orders forecast at +2.4% vs. -6.4% m/m previously.
The Japanese Yen (JPY) USD/JPY moved in a 20 pip range unable to take advantage of the USD strength with heavy EUR/JPY selling keeping the major capped. Most other Yen crosses were only down a little bit as US stocks finished positive. PM Noda talked in Japan that it will be coordinating with the BOJ to fight deflation fears going forward.
The Sterling (GBP) fell in sympathy with the Euro but only a small amount and found support at 1.5600. EUR/GBP broke below 0.8300 in new cycle lows. Data was decent with UK Mortgage approvals at 53k and Construction PMI ticking up to 53.2 vs. 52.3 previously. Looking ahead, December PMI services forecast at 51.5 vs. 52.1 previously.
The Australian Dollar (AUD) the Aussie dipped towards 1.0300 but found support and closed at opening levels in a bullish resistance to the Eurozone risk off. EUR/AUD hit all-time lows under 1.2500 and is continuing to trend lower. The outlook is mixed with a major event in Europe potentially causing a sharp selloff back to the 1.0000 level. We continue to look to the stocks markets and US Non Farm Payrolls data on Friday. UPDATE Trade Balance at 1380mn vs. 1595mn previously.
Oil & Gold (XAU) support below $1600oz was solid overnight and we closed at new week highs above $1610. OIL/USD remained supported on dips and closed above the $103 for a second day.
