Currency Updates:
*UPDATE* 23:50GMT Japanese FinMin Aso ‘No Plan to Buy Foreign Bonds for Monetary Easing or change BOJ independence Law for the time being’
U.S. Dollar Trading (USD) a quiet US session with markets closed for President’s Holiday and there was little fresh news for traders to digest. The G20 statement caused some Yen weakness in early Asia with USD/JPY breaking above Y94 but this was pared back with profit takers capping at Y94.20. The market returned in full force today with EUR/JPY and USD/JPY likely the main pairs in focus again. Looking ahead, NAHB Housing Market Sentiment forecast at 48 vs. 47 previously.
The Euro (EUR) was stable in a tight range on the major but made small gains against the Yen and the GBP. The highlight of the day was ECB Draghi speaking in Brussels where he commented again that the High Euro may impact the inflation statistics for Q1 and that general economic activity was still downbeat. Italian debt yields also increased on political uncertainty from the upcoming elections on the 24th-25th February.
The Japanese Yen (JPY) The USD/JPY was once again in focus in the Asian session with PM Abe right off the bat post G20 coming out swinging regarding the easy monetary policy and the political willingness to achieve a 2% inflation target. He threatens to repel the BOJ independence law and stated he would choose a new BOJ Governor that agreed with the Government’s inflation target.
The Sterling (GBP) Fresh trend lows where seen on Cable at 1.5440 before we bounced back to 1.5460 in quiet US session trade. The market is selling the Pound on expectations of further easing from the BOE and comments from Waele over the weekend confirmed this sentiment when stated the GBP had further to fall to balance the UK economy. Looking ahead, February German ZEW Survey forecast at 35 vs. 31.5 previously.
Australian Dollar (AUD) the Aussie was weak but found support at 1.0280 and bounced back to 1.0310 by the end of the US session close. AUD/JPY is supporting and is pressuring resistance Y96.90. The medium term outlook is for RBA rate cuts and AUD to fall further but we need a catalyst to break large support at 1.0200 region. Looking ahead, February RBA Minutes Released.
Oil & Gold (XAU) Gold consolidated loses and bounced up to $1618oz before sellers took control and we eased back to $1610oz and closed on weak footing. OIL/USD was quiet in a 70 pip range with the US traders away who generally provide most of the movement. Support at $95.30 has held on 3 occasions and is now the key short term support.
