Currency Updates:
U.S. Dollar Trading (USD) a volatile day of trading was seen Friday after stronger than forecast NFP data at 171k vs. 125k expected. The Unemployment Rate crept higher to 7.9% vs. 7.8% previously. US stocks opened higher on the good jobs data but it didn’t last and we saw heavy selling into the weekend as commodities crashed lower. Traders are being cautious ahead of the US elections on Tuesday. Looking ahead, October Services PMI forecast at 54.5 vs. 55.1 previously.
The Euro (EUR) was crushed lower to fresh multi week lows under 1.2900 with USD strength too much for the Euro bulls to handle. Greece concerns have resurfaced with the talks stalling as the opposition resists proposed new labor reforms. The Trioka has not released its aid and we could see delay turn to risk aversion and talk of Greek’s exit from the EU.
The Japanese Yen (JPY) the USD/JPY was immediately stronger after the NFP released with the US economy showing signs of life. While we have broken Y80 technically to the topside the US elections will likely cap moves till we have a result. EUR/JPY is hard to trade with the two majors in different direction we saw the cross stuck at Y103.
The Sterling (GBP) GBP/USD fell back to 1.6000 but has held above the level so far with EUR/GBP selling helping to support. The EUR/USD sell off has left all the majors under pressure and if the selling continues this week then the GBP/USD could be dragged into a downtrend with the single currency. Looking ahead, October PMI Services forecast at 52 vs. 52.2 previously.
Australian Dollar (AUD) the commodity led US stock selloff hit the Aussie the hardest on Friday with the commodity linked currency reversing from week highs at 1.0400 to test 1.0330 support. The RBA meets tomorrow and is the main event risk this week for the Aussie with a rate cut still the favored result. Looking ahead, September Trade Balance forecast at 1647mn vs. 2027mn. Also September Retail Sales forecast at 0.4% vs. 0.2% previously.
