Currency Updates:
U.S. Dollar Trading (USD) the market volatility ramped up again on heavy stock market losses across the globe after the FOMC minutes fallout continued across the Asian and then European sessions. The US data did little to help with misses on Weekly jobless claims (362k vs. 355k f/c), February Philly FED (-12.5 vs. 1.0% f/c) and Flash Manufacturing PMI (55.2 vs. 55.5f/c). Looking ahead, FOMC members Powell and Tarullo Speak both could be important with QE3 tapering off in 2013 being the main story in the markets overnight.
The Euro (EUR) the EUR/USD broke through a very important level at 1.3260 going into the European session yesterday and fell to fresh multi week lows near 1.3160. The market has recovered so far with some stabilizing comments from Eurozone politicians including the German FinMin Scheuble, Euro is at ‘quite a good’ level. Analysts suggest German Exporters can handle the EUR/USD up to 1.5000 where France and the PIGS are seen competitive at EUR/USD 1.1700.
The Japanese Yen (JPY) USD/JPY came under pressure from the liquidation of Yen crosses especially the EUR/JPY which broke key support at Y123 and dragged most pairs lower. The market is terming the recent rally “the reflation trade” and when the US FOMC Minutes hinted on taking away the cheap money via its QE3 program the market’s reaction was quite violent.
The Sterling (GBP) broke lower going into in the start of the European session with GBP/USD hitting new trend lows at 1.5125 before rebounding sharply to 1.5260 as EUR/GBP selling. The outlook is very weak for the GBP/USD and selling rallies remains the preferred way to gain from the strong downtrend. Looking ahead, February German IFO Business Climate forecast at 105 vs. 104.2 previously.
Australian Dollar (AUD) the AUD/USD was under pressure from AUD/JPY liquidations but the 1.0225 level held firm and we have seen a solid bounce in the Asian session following some hawkish commentary from the RBA Governor Stevens. UPDATE RBA Governor Stevens ‘China Slowdown Over’.
Oil & Gold (XAU) Gold hit fresh year lows under $1560 before bouncing to $1580. OIL/USD fell sharply after breaking through key support at $95B on Wednesday and we hit $93B before stabilizing overnight.
