Currency Updates:
U.S. Dollar Trading (USD) US stocks continued their rally extending to fresh 5 year highs with all time highs on the horizon. Adding to optimism was a drop in US initial Jobless Claims to 330k vs. 360k forecast. US 10yr Bond Yields increased to 1.85% and has a direct correlation with the USD and the USD/JPY in particular. Indeed most of the USD buying was done against the Yen overnight. Looking ahead, US New Home Sales forecast at 387k vs. 377k previously.
The Euro (EUR) The EUR/USD had a mixed day against the USD with some selling in Europe reversed later in the US session. European PMI Surveys showed a sharp drop in French manufacturing but a rise in the German reading. The major rallied to 1.3380 on the back of strong EUR/JPY and EUR/AUD buying. Bulls are targeting the 1.3400 but the resurgent Dollar had mad range trading more likely.
The Japanese Yen (JPY) was the main game in town with everyone watching the USD/JPY and Yen crosses moving sharply lower. EUR/JPY traded in a 350 range with the market liquidating the Yen after the Government jawboned again yesterday ending 3 days of Yen strength. USD/JPY broke above Y90 and is looking to extend gains after Japanese Trade Minister Nishimura suggesting Y100 is no issue with concern only at the Y110-120 levels.
The Sterling (GBP) fresh selling emerged overnight with GBP/USD breaking below 1.5800 even as it’s neighbor in the EUR/USD rallied in the US session. The EUR/GBP cross highlighted the different direction hitting a multimonth high above 0.8450. GBP/JPY was able to rally to Y143 but is the weakest. Looking ahead, Preliminary Q4 GDP forecast at -0.1% vs. 0.9% previously.
Australian Dollar (AUD) the AUD/USD broke out of the recent range to the downside bowing to the USD strength even as Chinese Manufacturing picked up in January according the HSBC PMI Survey. AUD/USD broke through 1.0500 and 1.4080 support which had held for the past two weeks.
Oil & Gold (XAU) Gold reacted negatively to the strong US economic data with risk appetite unable to match increased demand for the Dollar itself. Oil was relatively quiet overnight gaining to $96 with strong US data suggesting the world’s largest economy and consumer of Oil was improving.
