Gold helps USD weakness
City Index December 2, 2014 2:07 PM
<p>Yesterday saw some volatile moves after the USD started off strong in its normal trend. This got turned on its head for a few reasons; […]</p>
Yesterday saw some volatile moves after the USD started off strong in its normal trend. This got turned on its head for a few reasons; firstly, the downgrade of Japan’s sovereign rate by Moody’s which sent USD/JPY through the 119 level only to be aggressively sold off back down 100 points.
Behind the scenes, gold started to react to the SNB weekend news with a huge turnaround of $50, breaking above the 1200 level, which caused USD to sell off against all majors.
To help the pound, the manufacturing PMI was better than expected, so keeping it going strong.
The euro manufacturing PMI was mixed but the main one was Germany slipping back into contraction which will be a worry for the euro area but, with this, the euro carried on strong on the back of the USD sell-off caused by gold.
Overnight the Aussie had a good reaction to the RBA meeting, after they kept the rate steady at 2.5% to help the GDP along, but they also disappointed the doves with little change to the statement. Some of the same comments were made about the AUD being high, and a lower FX rate is likely needed for balanced growth. Currently just fell below 0.8500 as the USD has started strong this morning.
Today the main focus will be on the morning data from the UK, the construction PMI data expected to be 61.1 from 61.4. Looking back at the previous data it was in a good run of form building each month until a drop in Novembers data from 64.2 to the 61.4. currently GBP/USD trading just above 1.5700 level.
In the US we will be hearing Janet Yellen today in the afternoon as she talks at the 2014 College Fed Challenge National Finals, not much will be expected from this but always one to be watch closely.
Later this evening the Global Diary Trade price index from New Zealand will be announced. No expected data on this, but the previous two readings have disappointed and caused the Kiwi to weaken. The previous reading was -3.1%. NZD/USD currently trading just below 0.7850.
Overnight data will be mainly the Aussie GDP figure, which is expected to grow to 0.7% from 0.5%; a change here could persuade a change in rates for the RBA.
Supports 1.2425 1.2380 1.2335 | Resistance 1.2510 1.2550 1.2600
Supports 117.75 117.15 116.45 | Resistance 119.00 119.70 120.30
Supports 1.5625 1.5515 1.5450 | Resistance 1.5800 1.5875 1.5985