U.S. Dollar Trading (USD) another trading day in which a small stack rally was reversed and the USD ended strong as we prepare for NFP Friday. The market will be looking to see a bounce in the US jobs in May after two months of weaker than expected numbers. Good numbers today will spark a rally since stock markets have been under pressure for the past two weeks and would welcome positive news. Looking ahead, May NonFarm Payrolls forecast at 150k vs. 115k previously. May ISM Manufacturing is forecast at 53.9 vs. 54.8 previously.
The Euro (EUR) the market is rife with rumors of IMF bailouts for Spain after the IMF leader laGarde had meetings with Spanish officials overnight. These have been denied but the market managed to rally briefly as Greek exit polls showed more support for staying in the EU and Greek banks got access to ECB funding. Resistance was seen above 1.2400 and when IMF rumors were discounted the market fell back towards 1.2350.
The Japanese Yen (JPY) the USD/JPY slipped overnight on heavy cross selling and a lack of intervention from the BOJ/MOF in the Asian session. There was some normal verbal intervention but that was not enough for the low Y78 levels to be tested in the US session. Tonight’s US Jobs data is the most important monthly event in terms of USD/JPY movement.
The Sterling (GBP) the selling continued overnight with GBP/JPY continuing to crash down towards Y120 in risk off trade. The GBP/USD broke under 1.5400 and the GBP was sold faster than even the beleaguered Euro with EUR/GBP climbing back above 0.8000. Looking ahead, May UK PMI forecast at 49.8 vs. 50.5 previously. Also ahead, April Unemployment forecast at 11% vs. 10.9% previously.
Australian Dollar (AUD) the AUD/USD managed a small relief rally throughout Europe up off year lows at 0.9770 to 0.9870 into the US session. The lack of follow through and the denial of IMF Spanish help send the AUD/USD back towards 0.9700. The stock market and the EUR/USD is still setting direction but the market will also react to the Asia news today from China with both the public and private manufacturing PMI released.Looking ahead, May Chinese PMI forecast 52.2 vs. 53.3 previously. Also HSBC May Chinese Private PMI previously at 48.7.
Oil & Gold (XAU) the XAU/USD pivoted the $1560 level testing $1570 a few times overnight before falling back to close unchanged. OIL/USD is continuing to break down falling towards $85 with support struggling to be found.