: The impact of interest rate differentials on FX is highlighted by the fact that the correlation between EURUSD and GE-US 10-year yields is now at +0.90, the highest since June 2007. Gold remains under pressure despite improved risk appetite and a retreating USD, which is partially explained by FX traders reluctance to short the metal ahead of next weeks conclusion of Fed MBS purchases. Gold remains below $1,100, while silver unable to regain $17.00, thus, in line with our medium term outlook for and $1,065 and $14.80 respectively. EURUSD testing 10-day resistance of $1.3420, a break above which (weekly close) would call up $1.3460-65. GBPUSD seen capped at $1.4950-55. Interestingly, USD doing better vs CAD and AUD than vs EUR and GBP.
Comments