U.S. Dollar Trading (USD) the USD eased against the Euro with stocks finding support after falling in Asia and the investors shrugging off the Chinese trade deficit shock instead focusing on positive developments in Europe and US. USD/JPY is in focus today with the BOJ meeting in Asia and the FOMC later in the US session. The USD/JPY uptrend is strongest trend in the market and garnering a lot of attentions from analysts. Looking ahead, February Retail Sales forecast at 1 vs. 0.4% m/m previously. FOMC Rate announcement forecast to hold at 0.25%.
The Euro (EUR) the EUR/USD broke below 1.3100 hitting small stops but there was little interest for a move lower and we saw a modest reversal heading into the US session. The EUR/GBP also rallied breaking above 0.8400 for fresh March highs. Supporting was talk from EU finance ministers confident they will agree to increase the rescue fund to firewall the European debt crisis. This was seen as important prerequisite for larger contributions from Japan and China to the IMF. The Sterling (GBP) a weak performance overnight as the major tested 1.5600 and failed to track the Euro rebound and suffered on the Crosses. GBP/JPY is a safer way of buying the Pound with Yen weakness countering the recent Cable selloff. Looking ahead, March German ZEW survey forecast at 42.5 vs. 40.5 previously. Also ECB President Draghi speaks.
The Japanese Yen (JPY) the USD/JPY had a slight dip before support was found and buyers reemerged in the US session as traders believe todays rate meetings will expose a widening gap between the Japanese and US monetary policies. Any further expansion of BOJ support for the fragile Japanese economy may prompt more Yen weakness but the main event is the US FOMC statement in the US session. Australian Dollar (AUD) the Aussie was the weakest currency in the market yesterday with China’s recent slowdown hurting the Asian commodity first. Support was found under 1.0500 and we have opened the day stronger in Asia as bargain hunters look to buy the dip. Looking ahead, BOJ Rate Announcement forecast to hold at 0.1%.
Oil & Gold (XAU) Gold eased back to $1700 with traders weary of being caught long ahead of the FOMC given the large selloff after Bernanke’s speech on the 3rd of March. OIL/USD tested the lower range under $106 but finished back above the figure.
Pairs to watch
USD/JPY the currency to watch today, upside risks to Y82.80
EUR/JPY a more aggressive way to play the Yen weakness targeting Y110