Daily Report: EUR/USD, GBP/USD, EUR/JPY And AUD/USD : October 29, 2013

The U.S. Dollar rebounded and reached a session high against the Euro and the Yen after official reports indicated that the country’s Industrial Production improved at the fastest pace in close to seven months this September. The greenback received a boost following a release indicating that output in the industrial sector climbed by a seasonal 0.6 percent, surpassing forecasts for a 0.4 percent hike. The Dollar’s gains were somewhat limited as market traders are keeping an eye on the Federal Reserve, which begins its policy meeting today. The recent string of macroeconomics cemented the possibility that the central bank may refrain from making any changes in stimulus at present, especially as analysts anticipate that the country may have lost $24 billion due to the government’s partial shutdown. The U.S. monetary unit erased partial losses against the South Pacific currencies and was more or less unchanged against the Canadian currency. Other news revealed that U.S. Pending Home Sales plunged. According to the National Association of Realtors, sales dipped to a seasonally adjusted -5.6 percent in September after posting at -1.6 percent in the prior month. Meanwhile, Gold Futures for end of year delivery traded near five-week highs while investors shifted their attention to the FOMC, which is scheduled to deliver its policy decision this week. Futures on the Comex Division traded at $1,348.70 a troy ounce. As economists have explained, gold prices have remained sensitive to expectations over the Federal Reserve’s next move, and speculators are likely to make decisions based on this week’s events, which will include reports on inflation, retail sales and employment.

The Euro began Monday by trading higher against the U.S. Dollar as speculation that the Federal Reserve won’t slow stimulus dominated market opinion. However, the shared currency dipped later during the New York trading session once the U.S. reported a major improvement in Industrial Production. The British Pound slipped slightly against its U.S. counterpart after trading close to a four-week high on data issued out of the U.K. These metrics revealed that Home Values increased yet again in October. The British currency advanced versus most majors as the numbers signaled that the economy has gotten stronger, especially after last week’s releases confirmed growth in the third quarter. In other announcements however, the U.K. said that a mere 2 percent of British retailers sustained gains. The greenback surged versus the Swiss Franc, a currency normally considered a safe haven.

The Yen depreciated against the greenback subsequent to positive news out of the U.S., denoting growth in the Industrial sector. The Yen had inched higher on comments by the Bank of Japan’s Governor, Haruhiko Kuroda, who in response to the International Monetary Fund’s warnings on the use of monetary easing suggested that the bank would continue to use the existing measures to reach its inflation goals. The IMF said that the Prime Minister’s radical measures could “hit a wall” unless more reforms are instated.

And in the South Pacific, Australia’s Dollar advanced versus the majority of its most traded peers while investors remain focused on the FOMC, which is set to start a two-day policy meeting today. The Aussie strengthened versus the greenback but eased slightly later on Monday as Asian equities rose. The Australian currency benefitted from speculation that China may tighten monetary policy, a factor that became apparent after China refrained from adding money to exchange operations last week. The New Zealand Dollar also advanced while the U.S. currency remained under pressure on speculation that the Federal Reserve may continue with the current level of asset purchases now in place. New Zealand’s markets were closed on Monday in celebration of a national holiday. The nation’s central bank will deliver its interest rate decision on October 31st.

EUR/USD- Euro Loses Strength
The Euro dropped against the U.S. Dollar on Monday after the U.S. reported stellar numbers denoting gains in Industrial Production. In the Euro region, there were no economic announcements, however investors are wait for the European Central Bank to release the survey on lending which is expected to provide clues on whether there may be any changes in monetary policy or a new LTRO. The Euro slumped to session lows against the greenback.

GBP/USD- Home Values Up For A Ninth Month
The British Pound traded near a four-week high against its U.S. counterpart as data out of the U.K. released by the London agency, Hometrack, indicated that Home Prices climbed 0.5 percent this month, posting a ninth consecutive rise. Trading was rather subdued as millions of people were advised to stay home due to an impending storm which threatened the U.K. and most of northern Europe. In other news, only a small percentage of retailers said they experienced gains, a report which did not affect the Sterling’s advance. The Pound retrieved slightly after the U.S. announced increases in Industrial Production.

EUR/JPY- IMF Warns Japan
The Euro edged higher against its Japanese counterpart after the International Monetary Fund warned Japan about abusing monetary stimulus to bolster economic improvement. Mr. Abe introduced his “three-prong plan” the day he was elected Prime Minister and replacing the governor of the central bank immediately soon thereafter. Mr. Abe pointed out that the Consumer Price Index reversed trends after dropping for four years in a row, suggesting that some progress has been attained. The Euro dipped slightly as the greenback regained in the Monday morning trading hours. However, the greenback’s advance was capped by expectations that the Federal Reserve will delay its tapering plans for now.

AUD/USD- Aussie Up Versus Greenback
Australia’s Dollar remained strong while the greenback weakened on expectations the FOMC will deliver a decision indicating a delay in cutting back on stimulus. The Fed’s decision may be based on Friday’s metrics which denoted a big drop in confidence among consumers, and reports which showed that employers increased payrolls by less than anticipated. The Aussie continued to trade high as investors predict that Friday’s metrics may show improvement in China’s Manufacturing sector, an could show it grew at the quickest pace in more than a year. Meanwhile, Glenn Stevens, the Reserve Bank’s Governor, is scheduled to speak today. Speculators anticipate the RBA will leave interest rates at 2.5 percent.

Today’s Outlook
Today’s economic calendar shows that the U.S. will report on Core PPI and PPI, Retail Sales and Core Retail Sales, CB consumer Confidence, and the Red Book. Japan will issue metrics on Industrial Production. The U.K. will deliver data on Mortgage Approvals, M4 Money Supply and Net Lending to Individuals. Lastly, the Euro region will announce German Consumer Climate and French Consumer Confidence.