General Commentary
The EUR/USDis trading at 1.2933without much volume as traders are unsure what to expect next week from the FOMC. There has been no significant data outside of CPI for German and France. Traders are also concerned about the stimulus package offered by the ECB and are waiting for clarity and direction from the central bank. European Central Bank Governing Council member Christian Noyer said Thursday that the ECB had succeeded in bringing down the euro but the single currency needs to decline more for the central bank to hit is inflation target.
“To get back to our inflation objective of 2% a year we needed to bring the down the euro,” Noyer said in an interview on Europe 1 radio, adding: “We still need to bring down the euro.”
The GBP/USD soared today adding 42 cents and jumping well into the 1.62 range while traders still worried about the possibility of Scottish succession the reality of the matter is that it probably will not happen. A poll late on Wednesday showed 53 percent of Scots intended to vote against a split from the UK, in contrast to a YouGov poll over the weekend showing 51 percent in favor, helping pull the pound back from 10-month lows against the dollar.
Sterling pulled away from a 10-month low against the dollar and rose against the euro on Thursday, drawing some comfort from a poll which showed those voting in Scotland to stay as part of the United Kingdom were gaining the upper hand.
The AUD/USDgained 30 points on positive jobs data released this morning climbing to 0.9188still unable to climb above the 92 price. A measure of volatility reached its strongest level since February, reducing the allure of higher-yielding currencies whose profits could be erased by market moves. The US dollar reached a six-year high versus the yen on speculation US employment data today will back the case for the Federal Reserve to raise interest rates next year. The pound was near the lowest since November after a poll of voters in Scotland provided fresh evidence of a swing away from Britain. In Australia, the consumer confidence index for September fell 4.6 per cent to 94 from the previous month, a Westpac Banking and Melbourne Institute survey showed yesterday in Sydney. A figure below 100 indicates pessimists outnumber optimists. The Australian dollar, which recently struck 5-month lows against the U.S. dollar, bucked the broad strength in the U.S. unit after Australian jobs data showed a surprisingly big jump in payrolls.
The USD/JPY eased a few points in the Asian session after the yen soared close to the 107 level. The JPY is trading at 106.82 down by 4 points this morning. Last April, Japan’s government implemented a long-planned consumption-tax hike, from 5 percent to 8 percent, the first in a two-step increase that is expected to bring the rate to 10 percent by 2015. The hike, a key feature of “Abenomics,” Prime Minister Shinzo Abe’s three-pronged strategy to revive Japan’s economy, signals the government’s long-term commitment to fiscal consolidation. But it has also dealt Japan a heavy macroeconomic blow.
