Key Forex Afternoon Notes:
- China exports y/y rises 9.7% vs. 6% forecasts; imports y/y -2.4% vs. -6.2%
- Italy industrial production m/m 0.3% vs. 0.1%
- UK headline CPI y/y 0.5%; core CPI y/y 1.3%
Global markets saw a bullish day supported by better than expected imports and exports data from China. The global equity indices opened the week on a bearish note, but quickly managed to reverse their losses since Monday’s late US trading session.
The commodity risk currencies, Aussie and Kiwi dollar however failed to capitalize on the China led gains as the pairs spiked to make a session high during the Asian trading session only to give up their gains towards the European session.
The Japanese Yen which opened the week stronger also gave up its gains against the Greenback but remained largely mixed across the board. The USDJPY saw a quick decline to make an intraday low to 117.808 only to erase the losses to rally to intraday high of 118.845 and remains well supported to make further gains to the upside.
The European session saw the Euro remaining mixed before easing up to give back its gains. EURUSD managed to rally to make a session high of 1.1858 levels and reversed to trade lower for most part of the European trading session, last seen trading at 1.1778 levels at the time of writing.
The UK’s inflation data came out mixed with the headline CPI missing estimates and falling below 1%, while core CPI remained stable at 1.3%, clearly showing the Oil driven volatility in prices. While the Cable managed to drop lower, the losses were quickly recouped as the GBPUSD managed to rise back towards the daily pivot level, trading above 1.51 handle.
Commodity futures were mixed with Crude Oil continuing its decline. The black gold briefly dipped below $45 mark, making a fresh yearly low to $44.76 before managing to stabilize back above the $45 handle.
Gold futures on the other hand continued their bullish trend with the precious metal rising close to $1233 levels before easing back from the session highs. The mixed sentiment in the market reflected the Greenback which was trading mixed across the board. After hitting an all-time high to 92.75, the Dollar index eased back a bit but remains poised to upside gains as long as price remains above the short term support level of 92.
There is no major economic news from the US scheduled today but US Federal Reserve members continue to weigh in with their opinion on the interest rate hikes. The markets also seem to have now completely digested the mixed NFP reading for December, which shifts focus to the retail sales and CPI data due later this week. Yesterday, the Fed’s Labor market conditions index data was released, which managed to rise from previous month’s low of a revised 5.5 reading to 6.1, indicating a continued improvement in the US labor markets.
Today’s only economic release from the US is the JOLTS job openings report which is expected to show a reading of 4.86 million and the IBD/TIPP economic optimism, expected to rise to 48.9 after last month’s 48.4 print.
