The Greenback sell off builds momentum as the UN calls for USD replacement and a series of positive economic data cause a surge in Sentiment.

  • The USD lost ground across all majors yesterday as the UN called for a replacement for the USD with a new supra currency, so as to protect Emerging markets from been overly exposed to the USD  in the future.  In addition to this risk sentiment picked up as well as Asian Equity markets made yearly highs and Emerging Markets were trading at pre Lehman Brother levels. Risk appetite was influenced as well by excellent reports out of Australia, UK and Germany. In Australia we witnessed Business confidence surveys coming in at 6 year highs, in the UK we saw manufacturing output printing a 3 times higher than expected number and also a surge in German exports indicated global trade significantly picking up.
  • OIL also rallied the most in 30 days. The black gold seems to be acting as a hedge against inflation these days as the optimistic outlook on global growth picks up and the dollar gets dumped whilst looking for higher yielding assets. Further to this OPEC ministers met in Vienna to discuss production levels which also triggered speculation on future OIL output.  Gold made a spectacular run as well yesterday resuming its long term uptrend breaking the $1000 level and hitting highs of $1007.45. The move seemed to be on the back of Global inflation fears and the threatening of the USDs current reserve status.
  • A report by the Federal Reserve also showed that consumers in the US reduced the amount of money they borrow to finance their consumption for the month of July by 21.6 billion dollars whilst the market was expecting a decline of only 4 billion. That's the 6th straight month drop in consumer credit showing that consumers are reluctant to borrow since the Credit crisis begun and have a propensity to save in these uncertain times.  It is important to highlight that for a full recovery to take place a lot of attention is placed on a pickup in consumer spending as that is on average about 60 % of the US GDP.
  • Asian stocks overnight lost some ground as Japanese export orientated firms declined on the back of the continuous strong JPY and on profit taking. The Nikkei 225 was 0.95 at the time of righting

Currency to watch out for: GBPJPY & AUDUSD

  • The GBPJPY pivot point is at 1.5200 with a preference to enter into long positions at 1.5215
  • The AUDUSD pivot point is at 0.8575 with a preference to enter into long positions at 0.8575

Today's calendar and market movers:

  • Germany CPI month on month expected to rise by 0.2%
  • UK Trade balance for July expected to drop by 6.3bln pounds
  • Canada housing starts expected to increase by 139k for the month of August

Stocks:

  • The US markets closed 0.59% positive yesterday catching up to global averages as it was closed the previous day in observance of Labor Day.  As of 06:15 GMT the Nikkei is trading at -1.2% and the Hang Seng at -0.95%