The week began with risk decidedly on as moderate gains in the regions equities helped to keep currencies firmer. Although the week ended with a mixed bag of data and mostly flat stock markets in the US on Friday, markets opened with the high yielders stronger and that theme continued through the day. Saturday’s release of Chinese PMI which proved to be weaker than projected but all-in-all, not as bad as expected, (51.2 versus 51.5 forecast) eventually gave the markets a boost as traders generally looked to the bright side of the data. EUR/USD opened about 10 pips higher and pushed to 1.3086 highs after a quick detour to lows at the 1.3050 area.
The GBP/USD trailed the Euro to highs near 1.5730 after we witnessed some lows just under the 1.5700 big figure.
The yen began the new week softer, with the crosses building on equity moves higher. Strong export data out of South Korea also was instrumental in the whetting of the risk appetite as EUR/JPY pushed over 60 pips higher to highs near 113.30 on the day. GBP/JPY crossed over the 136.00 threshold to post highs just near 1.3615 as Japanese Finance Minister Noda helped grease the wheels with the seemingly daily mantra of stating that excessive currency moves are undesirable and that he was carefully monitoring FX moves. USD/JPY butted up against the 87.70 level but failed to break through the resistance there.
The AUD/USD posted three month highs as the pair clawed its way over the 0.9100 level on increased M&A talk related to the islands ample natural resources. NZD/USD tried, but could not get above the 0.7300 level on the day. Both the above currencies benefit greatly from an increase in risk appetite.
We have a very busy week ahead that will culminate with the US nonfarm payroll data on Friday, but in the interim, tomorrow is a loaded day down under, as Australia will release job advertisement, retail sales and building approval data that will be topped off by the RBA rate decision which is widely expected to remain unchanged at its current 4.50%.