Forex Afternoon Wrap – 11/01

Jan 11, 2:11 pm
Forex Afternoon

Markets show signs of abating risk aversion sentiment. US equity markets look to earnings season

  • Australia ANZ job advertisements m/m -0.10% vs. 1.10% previously
  • Swiss retail sales y/y -2.10% vs. 0.30%
  • Eurozone Sentix investor confidence 9.6 vs. 11.5
  • Canada housing starts 173k vs. 202k

Coming up

  • US Labor market conditions Index
  • BoC Business outlook survey

The markets opened today with the commodity risk assets faring modestly better than last week’s performance. The Australian dollar managed to post a steady rally after declining strongly in the opening hour to post a session low at 0.693 before reversing its day’s losses. At the time of writing, AUDUSD is up 0.73%, trading near 0.702 but remains below Friday’s high. Data from Australia today saw the ANZ job advertisements fall -0.10% for the month down from a downward revised 1.10% previously.

The Kiwi was also seen to be faring better as NZDUSD gained 0.17% for the day, trading at 0.655 after posting a session low early in the Asian trading session.

The Japanese Yen opened with a down gap today and touched a daily low of 116.81 before managing to reverse the losses. Japan is on a bank holiday today but investor sentiment was seen to be somewhat stable, as USDJPY gained 0.28% at the time of writing, trading near 117.9. The Yen weakened despite China shares falling nearly -5.0% today.

Economic data from the Eurozone was limited to the Eurozone Sentix investor confidence which fell to 9.6, missing estimates of 11.5 and down from 15.7 previously. EURUSD was seen on a weaker footing today, down -0.37%, trading near 1.088 at the time of writing. The move comes after an initial spike above 1.095 in early trading before the Euro started its descent.

Other data included Swiss retail sales which declined -2.10% for the month ending November 2015 compared to the previous 12 months on the headline, while, excluding fuel, retail sales showed a seasonally adjusted declines of -0.70% compared to October 2015. The decline in retail sales was led by a fall in sale of food, drinks and tobacco. The Swiss Franc was soft, as USDCHF is up 0.26% for the day, trading at 0.997 at the time of writing.

[Tweet “WTI Crude Oil is seeing another day of weakness, down -1.15% for the day”]

The NY trading session opened with Canada’s housing starts which increased at a slower pace of 173k and remain nearly -18.0% lower on an annualized basis. The Canadian dollar was, however, trading stronger, as USDCAD is down -0.41% for the day.

On the commodity front, Gold prices were seen to be retreating off their $1110 highs posted last week. The precious metal is down -0.13% and remains largely flat for the day with prices trading just under the $1100 mark. WTI Crude Oil is seeing another day of weakness, down -1.15% for the day. Prices touched a previous low at $32.27 before managing to stabilize higher. News from Saudi Arabia influencing Oil prices include Saudi Aramco’s potential IPO float and the kingdom reiterating the Riyal peg to the Dollar, which has come under pressure last year on falling oil prices raising concerns on whether Saudi Arabia would be able to manage its budget deficit.

The remainder of the evening is relatively quiet with the US equity markets looking to the year’s first earnings season being kicked off by Alcoa. Expectations in the earnings season are likely to keep the US markets on the front foot with the potential to recover off last week’s strong declines.

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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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