U.S. Dollar Trading (USD) although there are still plenty of doubts remaining about the new Eurozone measures yet to be announced optimism won out in the end on Friday and we saw fresh week highs on the EUR/USD into the weekend. US Q2 GDP met expectations at 1.5% Q/Q annualized. Speculation is mounting that QE3 will be announced by the FED this month to help stimulate a stumbling US recovery and this speculation is helping US stock markets to be very strong in recent sessions. Looking ahead, no US data today.
The Euro (EUR) The EUR/USD moved to 1.2390 after reports that the ECB president will be holding talks with the German Central banks over the weekend. No news has emerged so far but it’s clear they would have discussed measures the ECB could announce on Thursday at their Interest Rate meeting. There has been some German opposition in using the ECB to help sovereigns as this was not its purpose when created instead it was created to fight inflation.
The Japanese Yen (JPY) the USD/JPY enjoyed rare gains on Friday with the US GDP meeting expectations and the EUR/JPY soaring higher. The EUR/JPY dragged the major higher and could be a catalyst for further gains this week since a base has been put in place near the Y78 level. The USD/JPY is being hampered however but the growing consensus of further US monetary easing of some form.
The Sterling (GBP) the GBP/USD tested above 1.5750 a few times on Friday but each time we had solid resistance and the market is now ranging between 1.5700 and 1.5750 waiting for further news from the ECB and US FED. The UK itself has embarked of a very loose monetary policy with 0.5% interest rates and very large asset purchase program currently at 325bn Pounds. Looking ahead, July UK Halifax forecast at -0.5% vs. 1% previously. July UK CBI Distributive Trades forecast at 15 vs. 42 previously.
Australian Dollar (AUD) the AUD/USD soared to fresh multi month highs almost touching 1.0500 as it tracked the EUR/USD higher. The bears have been completely wrong on the AUD in recent weeks with the China slowdown story not as big as many had predicted and the EUR/AUD downtrend providing support rather than usual crisis selloffs seen for the AUD/USD. In fact for some investors the AUD is looking like a safe haven in Asia far away from the US and Eurozone debt concerns.
Oil & Gold (XAU) Gold pushed higher on Friday up to recent resistance near the $1620-35 levels. OIL/USD push above $90 a barrel as the volatile energy extended its rally.