U.S. Dollar Trading (USD) the Dollar ended the week on softer note after US CPI came in lower than expected especially the core CPI at 0.1% m/m. The USD/JPY and EUR/USD both saw Dollar selling and the stocks remained strong helping traders who have been playing the USD as a safe haven. Investors will be watching the USD closely this week to see if the uptrend can resume or fizzle as in recent years. Looking ahead, March NAHB Housing Market Index.
The Euro (EUR) the rally to 1.3180 resistance as taken pressure off the lower end of the range and traders now look to test the topside starting with 1.3300. The EUR/JPY is still under Y110 but is poised to test the key level again and a break may lift the entire Euro complex higher. The Sterling (GBP) the GBP/USD extended gains on Friday back above the 1.5800 and doing better than most as there is little directly negative story out there. GBP/AUD is beginning to threaten its long term down trend and a break above 1.5000 may see sharp gains as the China slowdown hurts the Aussie outlook. Looking ahead, January Current Account forecast 2.3bn vs. 2bn previously.
The Japanese Yen (JPY) the rally is stalling under Y83.50 and the USD weakness is capping gains in the major. The Crosses are still buoyant however and the AUD/JPY broke above Y88 and the EUR/JPY is threatening to break above the Y110 at any moment. Australian Dollar (AUD) the AUD/USD climbed back to 1.0600 and the market is still buying the Aussie when positive risk appetite just at a slower rate than before the China slowdown story. The AUD crosses are under more pressure with EUR/AUD and GBP/AUD both forming bullish technical signals and near key levels. The local data from Australia has also been weakening and further deterioration may lead to rate cut calls. Looking ahead, RBA minutes released Early Asia Tuesday.
Oil & Gold (XAU) Gold hit $1640 in Europe before finding support once again at the level and reversing aggressively to above $1660 into the weekend close. The Recent sell off is slowing and we may see a topside test in coming sessions. Rallied towards $107 on USD weakness ahead of end of contract Monday.
Pairs to watch
USD/JPY Buyers running out of steam?
AUD/USD A break of 1.0650 opens up the topside once again