Daily Report: EUR/USD, GBP/USD, AUD/USD And XAU/USD : July 15, 2013

Following a major sell-off prompted by comments issued by the Federal Reserve Chairman, Ben Bernanke, who suggested that the country’s economy is still in need of monetary easing, the greenback regained its footing against the majors. The currency’s increase in momentum was unaffected by the lackluster economic reports which revealed that Consumer Sentiment dipped this month. According to the University of Michigan, the Index, which gauges confidence, slipped from 84.1 to 83.9. Though the drop was minor, it still denoted that confidence remained at a 6-year high. Other metrics showed that Producer Prices climbed 0.8 percent last month, driving PPI to a one-year high. The hike came about due to the sharp advance in gas prices, even though food and energy costs merely increased 0.2 percent. This week, market investors will pay close attention to the release of important economic indicators such as Retail Sales, and Mr. Bernanke’s testimony regarding the state of the U.S. economy. Analysts believe the latter will promote further volatility in the Forex. Gold Futures remained little changed on Friday after they moved close to a three-week high. The precious metal’s gains took place after Fed Chairman Bernanke eased speculators’ predictions who believed the central bank would begin to taper its monthly bond purchases by as soon as September. Gold Futures for delivery in August moved up 0.3 percent and settled at $1,284.15 a troy ounce on the Comex Division of New York’s Mercantile Exchange.

The Euro erased its gains after the U.S. Dollar regained momentum and it was weighed after Fitch, the rating agency reduced France’s AAA rating on concerns over the nation’s increased debt and lackluster economic growth prospects. In the Euro region, data showed that Industrial Production declined and Portuguese 10-year bond yields settled after their major surge. This hike in yields came about as Portuguese leaders requested that international creditors hold off from reviewing the country’s bailout repayment plan. The British Pound surged versus the U.S. currency as the Fed Chairman Bernanke indicated that the U.S. economy needs to adhere to the current stimulus measures, as the employment sector has not fully recovered. The Sterling advanced after reaching three-year lows despite the fact that British Industrial Production contracted in the month of May. However, the Pound was not able to continue trading any higher versus the greenback as the U.S. monetary unit rebounded following a massive sell-off.

The Yen depreciated against the U.S. Dollar on Friday after rallying sharply in the earlier two trading sessions. The decline happened as the Fed Chairman indicated that the central bank was not considering reducing stimulus at this time. The Japanese currency made gains on Thursday when the Bank of Japan announced its plans to leave monetary policy unchanged, and after it reported that the nation’s economy appeared to be recovering ” moderately.” Markets are closed in Japan today in observance of a national holiday.

Lastly in the South Pacific, Australia’s Dollar dropped against its U.S. peer, hitting the lowest price since September of 2010, as investors continued to worry over the slowdown of China’s economy. The Aussie sustained a drop in demand as China’s Finance Minister stated that he anticipates the world’s second biggest economy will only expand 7 percent in 2013 rather than the expected 7.5 percent. Growing concerns over the economic situation in China also reduced demand for the New Zealand Dollar, especially since China is the nation’s second largest trading partner.

EUR/USD-Industrial Production Dips
The Euro traded lower against the U.S. monetary unit after the greenback recouped subsequent to a major sell-off that began when central bank’s chairman suggested that policy makers don’t plan to cut stimulus any time soon. The shared currency was weighed by a number of factors, including the reduction of France’s AAA rating, and the fact that the region posted a bigger decline in Industrial Production than predicted. According to official metrics, output posted a 0.3 percent fall in May, rather than the forecast 0.2 percent. Tomorrow, investors will keep a close eye on the ZEW report which will reveal German Economic Confidence, a major fundamental.
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GBP/USD-Sterling Rises Despite Domestic Data
The British Pound rose against the U.S. Dollar despite domestic data which showed that Industrial Output in the U.K. slumped in May. The currency remained strong in anticipation of this week, when the Bank of England will issue the Minutes from July’s Monetary Policy Meeting. The Office for National Statistics announced that Manufacturing in the U.K. slipped 0.8 percent after it posted a drop of 0.2 percent in April. The British currency declined slightly after the greenback rebounded subsequent to a major sell-off. This week, speculators will focus on British reports on Unemployment.
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AUD/USD-Aussie Plunges Beneath 90 U.S. Cents
Australia’s Dollar plunged beneath 90 U.S. cents for the first time since fall of 2010 as investors continued to speculate the Reserve Bank will bring the costs of borrowing money to a record low. Wagers, that this will take place, increased when reports indicated that Unemployment in the South Pacific nation climbed to 5.7 percent, and conditions in the Business sector deteriorated to levels not seen since the year 2009. Furthermore, China, the nation’s biggest trade partner announced that its imports and exports fell for a second consecutive month in June. The Chinese Finance Minister suggested that the country would only grow 7 percent, rather than the previously predicted 7.5 percent. In Australia, Friday’s releases confirmed that Home Loans rose 1.8 percent in May, less than economists anticipated.
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XAU/USD-Gold Remains Near 3-week Highs
Gold prices stayed close to three-week highs on Friday as comments by the Federal Reserve’s chairman, Ben S. Bernanke indicated the central bank won’t cut stimulus in the coming months. Gold prices continue to fluctuate as the market experiences a shift in expectations on U.S. monetary policy and this was quite evident in the past few days. The precious metal climbed 5.5 percent in the earlier part of last week, as Mr. Bernanke suggested that the country is in need of further ” accommodative” measures. Gold Futures hit the strongest price since June on Thursday, and those for August delivery settled at $1,284.15 a troy ounce on Friday.
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Today’s Outlook
Today’s economic calendar shows that Japan’s markets are closed for a holiday. Switzerland will report on PPI. The U.S. will issue data on Core Retail Sales, Retail Sales, and the New York Empire State Manufacturing Index. Australia will publish the Minutes from the recent Monetary Policy Meeting. And New Zealand will announce CPI.