EUR Strongest As AUD And NZD Shrink

The Euro appreciated against major currencies through the European session as EUR/USD gained to $ 1.3518, EUR/GBP strengthened to £0.8439, EUR/CHF climbed to CHF 1.2303, and EUR/AUD rallied to A$ 1.4386. German September Ifo numbers were mixed and helped push the EUR higher as the business climate index improved to 107.7, with the current assessment lower at 111.4 and the expectations index stronger at 104.2. The impact of Merkel’s re-election win seems to have faded. Spanish PM Rajoy was on the wire today suggesting Spain will not require an extension of its bank bailout program. EU’s Verwey said economic conditions are improving in the eurozone, but added the transition to economic growth is “fragile.” German GfK September consumer confidence numbers for October are due tomorrow.

The U.S. Dollar was mixed against most rivals through the European session as GBP/USD fell to US$ 1.6002, USD/CHF came off to CHF 0.9098, AUD/USD sank to US$ 0.9387, and USD/CAD bettered to C$ 1.0287. Dallas Fed’s Fisher weighed in on the Bernanke succession drama, reporting the White House has “mishandled” the transition, but adding Yellen would be a good chairman despite having differing views from him. Fisher also said last week’s vote to not taper QE at this time was not indicative of the debate at the FOMC meetings, adding the lack of a taper calls into question the credibility of the FOMC’s communications. New York Fed’s Dudley yesterday reported the U.S. economy “still needs the support of a very accommodative monetary policy” while Atlanta Fed’s Lockhart said policy should focus on more dynamic economic growth. Kansas City Fed’s George and Cleveland Fed’s Pianalto will speak today. Traders are watching congressional political fireworks where the Senate’s Cruz and Reid are locked in a battle regarding a possible defunding of Obamacare provisions and a vote to keep the U.S. government open from 1 October. Today’s data include July Case-Shiller home prices, September consumer confidence, and the September Richmond Fed manufacturing index.

The British pound was underwater against many major currencies through the European session as GBP/JPY fell to ¥158.17, GBP/CHF weakened to CHF 1.4564, GBP/AUD strengthened to A$ 1.7062, and GBP/NZD improved to NZ$ 1.9304. BoE MPC member Broadbent reported the U.K. economy is expanding faster than expected, adding deleveraging is slowing growth. Regarding monetary policy, Broadbent added a faster decline in the jobless rate could lead to a change in monetary policy. U.K. data saw BBA August loans for house purchases increase. CFTC data revealed long speculative positions in GBP increased to their highest level since June. CBI September sales data are due tomorrow.

The Canadian Dollar lacked clear direction against major currencies through the European session as USD/CAD moved higher to C$ 1.0287, EUR/CAD fell off to C$ 1.3867, CAD/JPY gained to ¥96.45, and GBP/CAD weakened to C$ 1.6453. C$ has been relatively weak for the past couple of weeks after retracing some lost ground during the first few days of September. Today’s Canadian data due for release include July retail sales and July average weekly earnings numbers that are due on Friday. The retail sales numbers are expected to show a rebound from the worst monthly decline this year. C$ fell on Friday following news that BlackBerry will cut 4,500 jobs, and yesterday’s news of a buyout deal could help the loonie. Yields on March 2014 bankers’ acceptance contracts have declined to a four-month low of 1.28%, indicating short-term interest rate expectations are moving lower. Also, overnight index swaps are currently pricing in about 5bps of tightening by July by Bank of Canada, down from 20bps before the FOMC voted to not taper.

Gold and Silver were marginally weaker through the European session as Gold fell to US$ 1316.26 and was capped at $ 1329.20 while Silver depreciated to US$ 21.513 and was capped at US$ 22.002. Physical demand for Gold is expected to strengthen ahead of China’s Golden Week holiday that begins from 1 October. Shanghai Gold Exchange data indicate volume data for spot gold has been increasing ahead of the holiday. U.S. banks Citigroup and Morgan Stanley are projecting the price of Gold will continue to move lower, with Citi eyeing a move below US$ 1250 before the end of the year. Holdings in Gold ETPs reportedly declined 0.4% to 1,933.1 metric tons.

Crude Oil was mixed through the European session as Brent futures slumped to US$ 107.30 and were capped at $107.98 while WTI futures fell to US$ 102.86 and were capped at $103.44. The UN Security Council continues to work on an agreement to disarm Syria of its chemical weapons ,and this is keeping a lid on prices. Nigeria reportedly restored some Oil pipelines that have recently been damaged, taking daily production back up toward 2.4 million barrels. Production in Texas was recently at the highest level in 32 years, also keeping a lid on higher prices. US EIA crude inventories data are due tomorrow and may show inventories are near 18-month lows.