Major Currency News

most markets finished higher with ‘risk on’ into the weekend on expectations of progress at the EU summit. The USD was under broad pressure with USD/JPY slipping to fresh all time lows under Y76 and EUR/USD edging above 1.3900. In US stocks, DJIA  +267 points closing at 11808, S&P +22 points closing at 1238 and NASDAQ +38 points closing at 2637.

The Euro (EUR) with sentiment improving on Friday the market bought up the Euro aggressively but this is being pared back on Monday as some disagreements on the Grand Plan bailout emerged over the weekend. France has withdrawn demands for the ECB to be used as bank and is instead focusing a new fund with the IMF to provide a final solution to the debt crisis. Looking ahead, Flash Manufacturing PMI forecast at 48.1 vs. 48.5. October Flash Services PMI forecast at 48.5 vs. 48.8 previously.

The Japanese Yen (JPY) broke out of range to the downside and fresh all-time lows under Y76. The USD weakness was the main catalyst but the Y75 is widely seen as a level that main prompt intervention from Japanese Officials in either a verbal or real way. EUR/JPY and AUD/JPY are higher on the major’s rally but these are largely dependent on whether a positive EU debt solution is found by Wednesday.

The Sterling (GBP) GBP/USD rallied sharply with stocks breaking above 1.5900 and threatening to test 1.6000 in coming sessions if the uptrend can continue. EUR/GBP selling added to the Pound support but the next direction is completely dependent on the EU Summit. Looking ahead, MPC Member Tucker speaks.

The Australian Dollar (AUD) the AUD/USD soared above 1.0300 with the large gains in US stocks propelling the risk currency higher. The market has been buying the Australian dollar aggressively in recent weeks on optimism of a positive outcome in the EU. Looking ahead, Q3 PPI forecast at 0.8% Q/Q. Also Chinese HSBC PMI previously at 49.9 with 50 being the key level.