Currency Updates:
*Update HSBC February Flash Manufacturing PMI misses at 50.4 vs. 52.2 f/c*
U.S. Dollar Trading (USD) the Dollar enjoyed strength across the board Monday after a myriad of news over the weekend. Late on Friday at the close of New York we saw UK downgraded by Moody’s with the financial epicenter losing its prized AAA rating. The other major news over the weekend was the announcement from Japanese PM Abe that he would be asking ADB Kuroda to be the new BOJ Chief and that Ultra dove will be his Deputy. Looking ahead, no economic data tonight.
The Euro (EUR) the EUR/USD managed a small rally in the US session but this failed and we are back under 1.3200 Monday with the sellers still in control. Some concern about a possible hung Italian parliament and the effect it could have on reigniting the European debt crisis has been noted as opinion polls suggest a very tight result at the weekend’s elections.
The Japanese Yen (JPY) USD/JPY has been surging in the Asian session on the announcement of the BOJ Chief selections including Ultradove “radical’ Iwata as the Deputy. The Yen crosses all piggy backed on the USD/JPY move but we have seen substantial profit taking so far in Asia. EUR/JPY pops Y125 but failed at key resistance and has fallen back to Y124.00.
The Sterling (GBP) was in the spotlight as rating agency Moody’s cut its AAA rating to AA1 stable. The reaction so far negative may lead to a rally with the cut widely anticipated and sell the rumor buy the fact a game often played with such announcements. This could play out if the UK government or BOE come out with hawkish comments or plans to reclaim its AAA rating sometime in the future. Looking ahead, ECB Weidmann Speaks.
Australian Dollar (AUD) the AUD/USD topped out at 1.0340 on Friday on the back of strong buying after RBA Governor Stevens talked up the Australian economy and played down the high AUD. This is stark contrast to the currency wars seen around the globe lately. AUD/JPY surged this morning and is helping to keep the AUD/USD bears in check. Looking ahead, no economic data.
Oil & Gold (XAU) Gold is getting support after heavy selling in previous 2 weeks with the Italian election uncertainty and fresh aggressive QE promises from Japan support the precious metals outlook. OIL/USD spent the day consolidating losses from Thursday finding support at the $93 a barrel level.
