Currency Updates:
U.S. Dollar Trading (USD) risk assets gained overnight at the expense of the Dollar after US Q4 company earnings continued to beat estimates. S&P500 rallied to fresh five year highs ahead of the FOMC rate decision later today. The recent run of good economic data and climbing Treasury yields is leading some analysts to bring forward their FED timetable to normalize US monetary policy. Looking ahead, FOMC Rate announcement forecast at hold at 0.25%. Also Q4 GDP Advance forecast at 1.1% vs. 3.1% previously.
The Euro (EUR) the EUR/USD stalled at 1.3500 unable to break above the key psychological resistance and letting other currencies play catch up. EUR/GBP fell back to lower 0.8500 region as the GBP/USD bounced but the uptrend is still strong and if the EUR/USD break 1.3500 we may see all the Euro crosses surge higher.
The Japanese Yen (JPY) USD/JPY spent another day consolidating falling back to Y90.30 before strong buying emerged and we once again finished near Y91 highs. EUR/JPY had a similar chart pattern for the day but exaggerated the range down to Y121.50 before reversing to Y122.50. Market chatter suggests that there are large buy orders in the lower Y90 region and large unfilled Japanese exporters above Y91.
The Sterling (GBP) the Pound spent most of the day in recovery mode rebounding from 1.5700 to 1.5760 in a quiet grind higher. The recent selling in the Pound is anticipating of further QE from the BOE or at least Jawboning from the BOE Members and new BOE Governor Carney (starts July 2013). Looking ahead, December UK Mortgage Approvals forecast at 54.5k vs. 54k previously.
Australian Dollar (AUD) the Aussie had a positive day rising with the US stock markets and taking a break from the constant selling seen on Friday and Monday. NAB Business Confidence gained 10 points in a good sign that the economy was picking up and recent RBA rate cuts were taking effect. Looking ahead, December Japanese Retail Sales forecast at 0.4% vs. 1.2% previously.
Oil & Gold (XAU) Gold was able to bounce off lows for small gains that where capped at $1666. Today’s FOMC announcement is extremely important for the precious metal. OIL/USD is perhaps the strongest trend in the market with buyers pushing through resistance daily. Overnight we closed at $97.50/b with $100/b a natural target for the bulls from here.
