U.S. Dollar Trading (USD) a slow US session with traders on Holiday but we did some movement during the European session where GBP/USD and EUR/USD both fell sharply. The lack of progress seen in the meetings from Europe has added uncertainty/risk to the trading environment. Looking ahead, US traders return.
The Euro (EUR) the EUR/USD broke below 1.3000 and headed down to 1.2940 before stabilizing into a tight range in the US session. The EUR/GBP is grinding higher to 0.8100. The EUR/JPY was very volatile falling with USD/JPY and the major sharply back to Y101.50. The Sterling (GBP) GBP/USD continued its correction lower towards the 1.6000 level almost testing it at 1.6020 by the close. The risk off feel and weakening technical picture is hurting the GBP on the major and the crosses. Fresh direction will require clarification of the Spanish bailout saga. Looking ahead, August Industrial Output forecast at -0.5% vs. 2.9% previously. Also, August Trade Balance forecast at -8.5bn vs. -7.15bn previously.
The Japanese Yen (JPY) USD/JPY buying faded with the Yen crosses heavy on Monday. Japan was away and this led to thin conditions but the mood was negative and the Yen strong. The G7 meet later this week in Tokyo and traders are cautious because the Japanese are keen to talk about the strength of the Yen in recent months. Australian Dollar (AUD) the AUD/USD downside was tested again overnight falling to 1.0150 but failing to break and bouncing back to 1.0200. The outlook is mixed with the fate of the Eurozone and the China to unknowns as of now. Sellers are looking for a 1.000 test in the coming sessions citing falling interest rates.
Oil & Gold (XAU) Gold broke down below $1770 briefly in the European session before edging back to $1775 in stable trade. Oil was subdued with the US traders away and we closed just under the $90 a barrel. Global growth concerns are mounting and might cap the energy going forwards.
Pairs to watch
EUR/USD Clarity on Spain soon?
USD/JPY Japanese Officials to talk Yen strength ahead of G7?