Currency Updates:
U.S. Dollar Trading (USD) stocks pulled back during the European and US Sessions as profit taking kicked in after Friday’s large rally. A weaker than forecast July Consumer Credit number at -3bn vs. +9bn forecast added to the downside weight. Further pullbacks could be seen if any of the risk events out of Europe emerge to the downside. Looking ahead, July Trade Balance forecast at -44.2bn vs. -42.9bn previously.
The Euro (EUR) some negative headlines out of Germany regarding fresh court challenges to the new ECB bond plan and jitters over a court decision due tomorrow regarding the ESM. Traders have been waiting weeks for tomorrow’s ESM decision from the German Constitutional Court with a negative outcome severely impacting the crisis. Also of note is the EU/IMF Troika inspection currently underway in Greece. Any negative comments regarding Greece’s commitment to Austerity could prompt more speculation of them leaving the Eurozone.
The Japanese Yen (JPY) USD/JPY was very quiet in a small Y778.20-30 range. We saw more weakness on the Yen crosses with EUR/JPY back below Y100 and AUD/JPY back below Y80. The USD/JPY is expected to react to the FOMC decision later this week so traders may sit on the sidelines until the announcement.
The Sterling (GBP) reversed back below 1.6000 as the lofty figure proved too much for the Pound given so many risk events on the horizon. The trend is still higher however so support is expected to be found shortly at either 1.5960 or 1.5920. GBP/JPY is struggling since Friday’s NFP and is hurting the outlook for the major. Looking ahead, July UK Trade Balance forecast at -8.9bn vs. -10.1bn previously.
Australian Dollar (AUD) weak August China Trade Balance data showing a sharp drop in imports hurt sentiment towards the Aussie and prompted a pullback to 1.0330 by the end of the US session. The German court rulings and stock market movements will direct the AUD/USD over the coming sessions. Looking ahead, August AUD Business Confidence previously at 4.
Oil & Gold (XAU) XAU/USD eased back $10oz to find support at $1725 as profit taking hit markets broadly. OIL/USD found support on a dip below $96 and closed back above the figure.
