Currency Updates:
U.S. Dollar Trading (USD) US stocks closed at fresh 2013 highs but the US Dollar was not sold off as usual but gained across the board. EUR/USD and GBP/USD led the market lower with both having negative news on the day. January UoM Consumer Confidence fell to 71.3 vs. 72.9 previously. Helping keep risk appetite strong was talk late on Friday that the republicans will raise the debt limit temporarily. Looking ahead, Holiday for Martin Luther King, Jr. Day.
Jr. Day.
The Euro (EUR) The EUR/USD reversed sharply from 1.3400 on Friday down to 1.3280 on the back of comments from ECB Member Course that short term interest rates will not be impacted if banks repay liquidity early. EUR/GBP is continuing its uptrend as the GBP worries grow. EUR/JPY has been volatile but finished above the Y120 level.
The Japanese Yen (JPY) USD/JPY closed above Y90 as the bulls remain in control ahead of the BOJ meeting tomorrow. Investors expect the BOJ to announce a new 2% inflation target that the Government has been pressuring the central bank to adopt since they swept to power in elections last month. EUR/JPY is getting a lot of attention with the recent uptrend stalling at Y120 on Friday but the outlook remains strong.
The Sterling (GBP) broke 1.6000 finally and crashed through to 1.5850 on the back on growing concerns that the UK will distance itself from the EU. PM Cameron has a critical speech planned on the subject this week and traders will be carefully digested his comments to gauge the conservatives long term European plans. Looking ahead, German PPI forecast at 0.0% vs. -0.1% previously.
Australian Dollar (AUD) the AUD/USD remained quiet at the bottom end of its 1.05-1.06 range. The outlook for the commodity currency is mixed with recent stock and Oil gains failing to materialize into Aussie strength. AUD/JPY is still in a strong uptrend but most of these gains are from the USD/JPY. A strong China bounce in Q4 is underpinning the AUD support.
Oil & Gold (XAU) XAU/USD spent the day consolidating Thursday’s gains with $1695 keeping the topside of the market in check. Oil was more buoyant but failed to break above $96 with the market overbought in the short term.
