General Commentary
Last week’s currency trading review
The EUR/USD surged higher as the ECB delivered a major new backstop to the markets that could potential put an end to the European Debt Crisis. ECB President Draghi introduced the new plan at the ECB meeting on Thursday and outlined how the central bank could buy unlimited 1-3 year EU government bonds to help stabilize the bond market and keep yields lower. Some German opposition to the plan still remains however and it will have to be ratified by the member states. On this note the original Eurozone bailout plan (ESM) which was already announced is expected to have an important German Court ruling this week.
USD/JPY is sitting just above Y78 after the weak US nonfarm jobs last week have increased the markets expectations of QE3 at Thursday’s US FOMC rate decision. A break of the Y78 level may lead to further selling as this is the bottom end of a multi month range between Y78-80. If Bernanke fails to deliver the QE3 then a sharp rally will be expected and we may see the USD/JPY back above the Y79 level again. Yen Crosses are also quite active with strong EUR/JPY moves and interest to sell AUD/JPY as China’s slowdown hurts the commodity powerhouse.
Currency Movement last week
EUR/USD was up +1.89% closing at 1.2814, after opening the week at 1.2572.
USD/JPY was down -0.15% closing at 78.22, after opening at 78.34.
GBP/USD was up +0.89% closing at 1.6005 after opening at 1.5863.
AUD/USD was up +0.62 % closing at 1.0391 after opening at 1.0327.
