Forex Afternoon Wrap – 16/11

Nov 16 2015, 1:33 pm

Eurozone CPI rises 1.1% beating estimates of 1.0%

  • Japan Preliminary GDP q/q -0.20% vs. -0.10%; GDP annualized -0.80% vs. -0.20%
  • Japan preliminary GDP Price index y/y 2.00% vs. 1.70%
  • Australia new motor vehicle sales m/m -3.60% vs. 5.90% previously
  • Eurozone final CPI y/y 0.10% vs. 0.00%; Core CPI y/y 1.10% vs. 1.00%
  • Canada manufacturing sales -1.50% vs. 0.30%
  • Canada Foreign securities purchases 3.35bn vs. 4.12bn
  • Empire State Manufacturing index -10.47 vs. -5.3

Following the Friday’s terror attacks in Paris, the equity markets opened on a subdued note on risk aversion as the Yen gained ground along with the US Dollar. The Asian commodity risk currencies came under pressure as the Aussie and the Kiwi was seen trading lower for the most part of the day. AUDUSD attempted to rally but failed near daily highs of 0.713 before easing back lower while NZDUSD posted strong loss, losing -0.82% for the day as the currency fell since the opening session to trade near 0.648 at the time of writing. Earlier on Sunday, retail sales numbers from New Zealand saw a mixed picture with the monthly retail sales rising 1.60% for the quarter, beating estimates of 1.00%, and the core retail sales was up 1.00% missing estimates of 1.40% increase.

Earlier, Japan’s GDP numbers saw the country post a second straight quarter of economic contraction of -0.20%, while on an annualized basis, Japan’s GDP showed a contraction of -0.80%.

The GDP numbers are likely to play a crucial role ahead of the Bank of Japan’s meeting due later this week on Thursday; albeit the BoJ’s own forecasts showed that the economy would remain weak into the third quarter.

USDJPY touched a session low to 122.25 but soon reversed the declines as the Greenback rallied over 0.30% against the Yen to post initial daily highs of 123.13.

The European session saw the markets gear up for the Eurozone CPI numbers, which surprised to the upside. Headline CPI increased 0.10%, beating estimates of 0.00%, while the Core CPI gained 1.10% beating estimates of 1.0%. The Euro was however unimpressed with the data and was seen to be trading choppy for the most part of the day as the EURUSD touched a daily low to 1.6860 before easing back higher. ECB’s Vice-president, Vitor Constancio was on the wires once again keeping the pressure on the Euro as he reiterated that further monetary policy easing options were available with the ECB if needed.

GBPUSD remained weak but was biased to the downside after a short attempt to rally to the day’s opening, but failing to do so saw the Cable trading lower near 1.5190 at the time of writing.

The US trading session saw the Canadian manufacturing sales data being released, which showed a decline of -1.10%, down from 0.30% increase seen previously. USDCAD gained 0.12% for the day trading at 1.333 at the time of writing. US Empire state manufacturing fell -10.47, below estimates of -5.3 but the US Dollar Index was unmoved on the release.

In other developments, the IMF recommended that China’s RMB be included in the SDR or Special Drawing Rights basket, which includes the US Dollar, Euro among other currencies. However, no specific date has been set for the inclusion although there is a widespread speculation that the decision could be taken by November 30th.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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