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Euro Gains on Chinese Interest while Gold Falls $10

The FX markets have calmed following the sharp price moves seen in the Asian session as traders await US economic data later. The euro and equities are higher spurred by Chinese interest in Portuguese bailout debt and dollar block currencies.

The Nikkei finished the day up 1.48% following a Financial Times report citing Chinese interest in the Portuguese debt auctions from the European Financial Stability Facility. The euro was a prime beneficiary of this move and the currency is trading higher today across the board. The report helped to put the Greek debt crisis on the back burner and turn the focus on global reserve managers and FX diversification which had previously been a catalyst for the euro. The EUR/USD easily took out the 1.4130 resistance in the Asian session, moving as high as 1.4194 from 1.4081 before settling at 1.4170. A breach of today’s high and the EUR/USD could add another 1.5 cents as the next resistance level lies at 1.4350 off of last Friday’s high and the 50-day moving average.

Sterling is weaker versus the euro but higher against the dollar as the rebound in equities has kept both the dollar and sterling lower. The EUR/GBP traded higher at 0.8693 from 0.8652. Cable is up at 1.6310 from 1.6271. Cable’s gains have been capped today at the previous trend line rising off of the January lows. A break of this level could take the GBP/USD higher to 1.6515.

Dollar bloc currencies are up with the New Zealand dollar bid as the Kiwi rose to a high of 0.8111 where the NZD/USD failed to break above the high from earlier in the month. Next resistance for the pair lies at 0.8215 off of the double top pattern in 2008. AUD/USD is up as well but still remains locked in a consolidation pattern with resistance at 1.0710 and support at 1.0430.

Commodities are notably softer with crude oil down at $100.75 and silver shedding $2.20 after earlier reaching a 2-week high. Spot gold prices are also lower by$10 on the day. Resistance is at $1,532 followed by the all-time high at $1,576. Support comes in at $1,503. The pullback in oil and metals is surprising given the sharp gains in Asian equities as well as the euro. Perhaps this indicates bearish positioning ahead of the US preliminary GDP and weekly unemployment claims later this afternoon.

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Russell Glaser

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.