As Russia stopped the military exercise on the Ukraine border, the Euro rebounded 0.36% against the Dollar on Friday, which is its biggest rally since July. A short term bounce may occur this week as the pair has fallen over 2% in one month and gained some support from the 1.33 integer level. However, since the ECB is inclined to introduce further asset purchasing programs and Russia maintains its confrontational stance against NATO members on the Ukrainian situation, a weaker Euro is probably foreseeable in the long run.
The Yen continued its rally after U.S. President Obama declared they look to conduct airstrikes on Sunni extremists in North Iraq. Dollar/Yen hit the day low of 101.50 during the early European session but recovered most of the loss afterward. It closed at a 102 integer level. The breakout of a triangle since April still supports the currency pair, but further direction depends on the geopolitical issues.
Gold prices rocketed to $1322 per ounce on Friday after Obama’s nod to airstrikes. However, the surge was erased in the U.S. session as investors started to worry about the possibility of sooner-than-expected rise in U.S. interest rates. The prices finally closed at $1310, leaving a long upper shadow in the daily chart. Chances are that the $1320 resistance will be broken if tensions in Ukraine and Iraq escalate.
Most of the Asian stocks markets were under pressure after the U.S. declared airstrikes on North Iraq. The Shanghai Composite bounced 0.31% to 2194. The Nikkei Stock Average plummeted 2.98% for a stronger Yen. The Australian ASX 200 fell 1.34% to 5435 as RBA lowered its economic outlook. In the European stock markets, the FTSE closed 0.45% lower, the German DAX lost 0.33%, and the French CAC Index closed flat. U.S. stocks rebounded with the fears of Ukraine and the troubled Portuguese bank temporarily died down. The Dows surged 1.13% to 16553. The S&P 500 gained 1.15% to 1932, while the Nasdaq Composite Index was up 0.83% to 4371.
Little economic data out today. Switzerland will release its Retail Sales and Canada Housing Starts will be out at 22:15 AEST.
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