Daily Report: EUR/USD, GBP/USD, XAU/USD And AUD/USD : July 03, 2013

The U.S. Dollar rallied against most of the majors and although it appears as if the advance was due to the positive Factory Orders data, the greenback began its upward climb as market investors purchased U.S. Dollars in anticipation of Friday’s Non-Farm Payrolls. On the data front, the Commerce Department stated that Factory Orders rose 2.1 percent in May, exceeding forecasts for a 2.0 percent increase. The figures boosted the possibility that the Federal Reserve may scale back on stimulus later this year. In the meantime, Gold Prices dipped for the first time in three trading sessions as better than forecast U.S. economic releases sparked speculation that the central bank will begin cutting back on the monthly asset purchases some time in the near future.

The Euro depreciated against the greenback following the release of better than expected Factory Orders metrics and it remained under pressure as Portugal’s Finance Minister, Vitor Gaspar, tendered his resignation after it became apparent that the country’s budget deficit widened during the initial three months of the year. Spain announced that the number of individuals who filed for Unemployment Benefits dipped by 127,248 last month. Despite the good news, the shared currency traded lower against the U.S. Dollar. The British Pound advanced versus the Euro for the first time in close to one week as industry reports revealed that Construction in the U.K. improved, suggesting the country’s economy remains on the track to recovery. The Sterling, however, traded at one-month lows versus the greenback amid concerns over upcoming decisions set to be issued by the central bank later this week. During said time, the Bank of England and the European Central Bank will issue decisions on policy as well as the cost of borrowing money.

The Yen slipped against the U.S. Dollar following the announcement of Factory Orders and it continued to decline as investors positioned themselves in anticipation of Friday’s Payroll reports, especially as the Federal Reserve suggested that Friday’s data may show a drop in the Unemployment rate.

Lastly in the South Pacific, the Australian Dollar fell versus the greenback after the Reserve Bank announced its intention to leave the benchmark interest rate at a record 2.75 percent and indicated that it may cut the rates later in the year.

EUR/USD- Spain Issues Positive Data
The Euro weakened against the U.S. Dollar despite the fact that early week reports showed the Euro region’s Purchasing Manager’s Index reached a 16-month high in June while indices from Spain and France surpassed prior forecasts. The decline took place as the U.S. issued strong Factory Orders and as investors anticipate that Friday’s Non-Farm Payrolls may provide further support for the Federal Reserve to begin tapering stimulus this year. Today, the E.U. will announce Retail Sales figures, while Spain and Italy publish data relating to their Services sectors.
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GBP/USD- Construction Points To Recovery
The British Pound hovered near one-month lows against the greenback despite solid figures which revealed growth in Construction in the U.K. According to Markit, the Construction Purchasing Manager’s Index climbed to a seasonally adjusted 51.0 in June after posting at 50.8 the previous month. Economists believe this release may reduce the possibilities the Bank of England will expand stimulus as it proves the country is still rebounding. Analysts say the data has improved the outlook for growth for the second quarter.
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XAU/USD- Gold Dips Again
Gold Prices fell again after the U.S. released strong economic data which investors believe may make the case for the Federal Reserve to slow down stimulus this year. Figures showed that Factory Orders climbed in May, prompting the greenback’s appreciation. Gold Futures for August delivery slipped 1 percent and settled at $1,243.40 a troy ounce on the Comex Division of the New York Mercantile Exchange. With this drop, the precious metal has depreciated 26 percent in 2013 alone, as many market investors lost faith in the metal.
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AUD/USD- Rate Remains At Record Low
Australia’s Dollar declined against the greenback after the Reserve Bank announced it will leave the costs of borrowing money at a record 2.75 percent. Policy makers indicated that the bank may proceed with further cuts later in the year as the low rate of inflation has left room for further monetary easing. For now, investors will keep an eye on Retail Sales, an important gauge of Consumer Spending which is a major component of economic activity.
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Today’s Outlook
Today’s economic calendar shows that the U.K. will issue the Halifax House Price Index. The Euro region will report on Services PMI and Retail Sales. The U.S. will publish ADP Non-Farm Employment Change, Initial and Continuing Jobless Claims, Trade Balance, ISM Non-Manufacturing Index and Crude Oil Inventories. Lastly, Australia will release Building Approvals.