U.S. Dollar Trading (USD) the USD enjoyed gains from Euro led selling overnight but we also saw Yields on long Term US debt start to move higher and this is getting attention as they have been at historical lows lately and any move higher will greatly affect the Dollar’s Future. June Trade Balance improved to -42bn vs. -48bn previously. Weekly Jobless Claims remained steady at 361k vs. 370k forecast. Looking ahead, July Import Prices forecast at 0.1% vs. -2.7% previously.
The Euro (EUR) the Euro was under pressure yesterday as the bulls ran out of patience and concerns about the timing of ECB/ESF bond buying dominated the headlines. EUR/USD found support at 1.2270 and closed at 1.2300 but is looking weak technically after failing at the 1.2440 level. The outlook is still subject to headline risk with daily commentary from ECB and EU officials moving the market. The Sterling (GBP) the GBP/USD muddled through an uninspiring day of trade falling back from highs in Asia at 1.5680 to support at 1.5610 in the US session. The Major is still bullish technically with higher lows daily but a failure to break 1.5700 soon will weigh on sentiment. June UK Trade Balance widened to -10bn vs. -8bn previously. Looking ahead, July German CPI forecast at 0.4% vs. 0.4% previously m/m.
The Japanese Yen (JPY) the USD/JPY is staying very close to Y78.50 but this is still stronger than usual with the case for going long on the USD/JPY assisting US yields. The Outlook is still very mixed however and US monetary policy as well as EUR/JPY will have a big impact. The BOJ held at 0.1% and did not offer any new stimulus. Overnight we did hear a warning from Fitch that Japan may lose its AAA rating if it does not do more to cut its Debt. Australian Dollar (AUD) the AUD/USD hit day highs above 1.0610 before reversing lower in the European and US session tracking the Euro and GBP. The main drag yesterday was the weaker than expected Chinese industrial output data. July Australian Jobs were strong at 14k vs. 10k forecast. Looking ahead, Chinese July Trade Balance forecast at 34bn vs. 31.7bn previously.
Oil & Gold (XAU) Gold is close to the $1618 resistance but has still not broken the key level in last 3 weeks. OIL/USD was very quiet in a $93-$94 range.
Pairs to watch
XAU/USD To break $1618 or risk bigger pullback?
EUR/USD Rally over?