U.S. Dollar Trading (USD) stocks and risk assets managed to rally overnight on the back of more QE3 talk from Fed Member Evans who stated he would support more measures to stimulate the economy. The FOMC meeting is next Wednesday and there has been much speculation on what could occur. Also helping the rally overnight was talk from Mexico’s President that the G20 meeting this weekend will focus on a solution to the EZ crisis. Looking ahead, May PPI forecast at -0.6% vs. -2.3% previously.May Retail Sales are forecast at -0.2% vs. 0.1% previously.
The Euro (EUR) the EUR/USD was a laggard overnight with the EU crisis still ongoing the market was going to buy the Euro last. Strong resistance at 1.2530 has contained the topside on many occasions and we closed at 1.2500. More Spanish banks we downgraded but the QE3 talk out of the US countered to keep the EUR/USD frozen in a tight range.
The Japanese Yen (JPY) the IMF report on Japan was extremely negative overnight and this help lift most Yen crosses and the USD/JPY from risk aversion lows on Monday. The AUD/JPY in particular is gathering support from low levels.
The Sterling (GBP) weak economic data delayed the GBP/USD rally in Europe but once the market got above 1.5520 we saw quick gains to 1.5580. EUR/GBP is pressing down towards 0.8000 once again and this could be a major level in play in coming days. BOE Member Tucker talked of doing more in the tight credit conditions to help lenders. Looking ahead, May German CPI is forecast at -0.2% vs. -0.2% previously. Also April Industrial Production is forecast at -1% vs. -0.3% previously.
Australian Dollar (AUD) the AUD/USD hit rallied from 0.9850 lows in Asia yesterday to move a full big figure higher and be on the front foot in trade today. The resilience the AUD/USD is showing lately is frustrating the bears that had been given every reason to sell lately. RBA governor Stevens spoke on Wednesday morning and stated the high AUD dollar was bad for exporters but good for Australian Consumers. Looking ahead, no economic data.
Oil & Gold (XAU) Gold rallied on the QE3 talking in the US session to move back above $1610. OIL/USD moved higher with stocks ahead of the OPEC meeting tomorrow which could provide plenty of volatility.