U.S. Dollar Trading (USD) the USD was sold for a third day with some comments from NY FED Member Dudley that downside risks to the US economy were ‘meaningful’ including high Oil prices and Housing recession. The US March NAHB Housing Index was steady at 28 and traders will be watching critical US housing data later in the week as the Housing sector is the main reason US interest rates are set to remain low until 2014. Looking ahead, US FEB Housing Starts and Building Permits. Also FED Chairman Bernanke speaks.
The Euro (EUR) the Euro broke above 1.3180 resistance and is now in range of the 1.3300 resistance zone which will prove tougher then the smaller resistances in recent sessions. The EUR/JPY broke above the Y110 level as widely expected with the trend firmly in place now with aggressive targets going forward. Traders are suggesting that central bank diversification is supporting the Euro on many fronts and while the Eurozone Debt crisis is not completely behind us there is less trader focus on the potential downside risks. The Sterling (GBP) the GBP/USD tested 1.5900 but fell back in the US session as EUR/GBP rebounded off the 0.8300 level and is threatening 0.8350 resistance ahead of key CPI data today from the UK. Looking ahead, February CPI forecast at 0.5% vs. -0.5% previously. February March CBI orders forecast at -6 vs. -3 previously.
The Japanese Yen (JPY) USD/JPY fell back on USD weakness to test Y83 before finding buyers and reversing back to Y83.40 on strong cross buying which tracked the US stock market higher. The outlook is for more JPY weakness but the USD/JPY gains may slow down and the more traditional risk crosses such as AUD/JPY and GBP/JPY could provide more trading potential. Australian Dollar (AUD) the AUD/USD found heavy resistance above 1.0600 and fell back in Asia today after the world’s largest miner and Australia’s biggest company BHP noted demand for Iron Ore out of China has fallen and some of its planned investments may need to be reviewed. Looking ahead, NZD Q4 Current Account forecast at -2.75bn vs. -4.6bn previously.
Oil & Gold (XAU) Gold broke to two week highs but the gains proved to be a false signal as the rally faded and currently in Asia we are back under $1660. The outlook is for more range trading while the USD is remains buoyant. Oil remained strong pushing above $108 a barrel responding to growing murmurs Israeli may launch strikes at Iran.
Pairs to watch
EUR/JPY the preferred way to buy the Euro above Y110
OIL/USD tensions going to push the energy above $110?