U.S. Dollar Trading (USD) stocks dipped overnight but we found support quickly and the bulls remain in control. The USD was able to hold onto small gains overnight as the EUR/USD led the other majors lower. Traders are still looking to sell the USD however at better levels given the ultra-loose FED monetary policy. Looking ahead, August Build Permits forecast at 0.796mn vs. 0.765mn.
The Euro (EUR) another leg lower towards 1.3000 overnight as the market worried about the Spanish commitment to a bailout with talk that they are still evaluating the need for ECB money. The markets are pushing Spain to accept the bailout and implement budget cuts. Big support for the major is seen close to the 1.3000 level. The Sterling (GBP) the GBP/USD held gains against the USD and gained across the other currencies as the outperformance continued. EUR/GBP fell to 0.8030 and is eyeing a retest of the 0.8000 level. GBP/JPY back at Y128 and will be looking retest the critical Y130 level. Looking ahead, September UK MPC forecast at 9-0 unchanged.
The Japanese Yen (JPY) USD/JPY is retesting Y79 today in Asia as the BOJ announce fresh easing measures to help stimulate a faltering recovery. The BOJ is targeting to get inflation back to at least 1.0% and currently we are near deflationary spiral as asset values fail to match CPI gains. EUR/JPY and GBP/JPY are both near recent highs and looking to continue uptrends. Australian Dollar (AUD) the Aussie was the weakest currency in the market overnight with more China slowdown concerns and weakness in commodities putting the sellers in control. The AUD/USD has now pulled back 200 pips since Friday’s highs and is losing ground on all its’ crosses. The feeling towards the AUD/USD is mixed with the strong stock outlook supporting but fears that the Australia economy has peaked and entering a contractionary business cycle are weighing. UPDATE BOJ Hold at 0.1% but expand bond buying program.
Oil & Gold (XAU) Gold returned to the uptrend trading back to $1770. OIL/USD fell back with US stocks to $95 a barrel again but quickly found support and is well bid back above $96.
Pairs to watch
EUR/USD uptrend to continue?
XAU/USD Japan joins easing party, Gold higher again