U.S. Dollar Trading (USD) a lot was happening on Friday although the initial enthusiasm for the Greece success failed to push US stocks significantly higher and even strong Jobs numbers failed to inspire fresh risk taking. The USD was able to strengthen significantly however with many speculating the US monetary policy will have to adjust to the recent improvement in US employment. Looking ahead, February Employment Trends previously at 105.8.
The Euro (EUR) the rally post Greece bailout fizzled with the ISDA calling the debt swap deal a credit event and the USD well supported post nonfarm Jobs data. The market closed just above 1.3100 and a move lower Monday is very possible while the downside remains pressured. EUR/GBP tested and failed at 0.8400 and could be in for further losses this week if sentiment turns negative again. The Sterling (GBP) the GBP/USD tracked the Euro lower with buyers losing faith in the recent rally and instead now searching for support as we approach 1.5650. The outlook depend on whether this recent run of USD strength is a blip or start of something longer term as stock markets are holding up rather well and usually the GBP would be much better in such an environment. Looking ahead, German WPI forecast at 1 vs. 1.2% previously.
The Japanese Yen (JPY) had the cleanest reaction to the US jobs data on Friday breaking above Y82 and rallying to Y82.50 after the better than forecast increase of 227k jobs in February and then the positive 60k revision of the previous 2 months leading to strong USD buying. Support is seen on dips and widely expected to continue higher ahead of the FOMC meeting this week. Australian Dollar (AUD) the Aussie reversed as support disappeared even with stocks up and Gold higher. A string of poor economic data last week finally took its toll and we saw the risk currency moving back below 1.0600 into the weekend. On Monday the AUD/USD opened very weak with the largest Chinese trade deficit 30bn vs. 5bn forecast the biggest in over 10 years in February. Looking ahead, Australian February Business Confidence previously at 4.
Oil & Gold (XAU) Gold was a bright star in the market reversing early losses to break above $1700 and then $1710. OIL/USD tried to break higher but finished under the $107 topside resistance as the strong Dollar capped.
Pairs to watch
USD/JPY Targeting Y85 this week? FOMC Risk
EUR/USD Disappointing post Greece performance suggesting downside?