Key Notes for November 13th
- Aussie weakens on comments from RBA Assistant Governor, Kent Wheeler
- Yen volatile on rumors going back and forth about potential snap elections and sales tax hike delay
- Germany CPI and HICP meet expectations at CPI y/y 0.8%, CPI m/m -0.3%, HICP y/y 0.7%, HICP m/m -0.3%
- France CPI y/y 5% vs. 0.4% consensus; CPI m/m flat at 0% vs. -0.1% consensus
- US Weekly jobless claims 290k vs 280k estimates
During the early Asian trading session, RBA assistant governor Kent Wheeler made a speech where he noted that the RBA has not ruled out Fx intervention while calling the Aussie to depreciate further in the coming year. The Australian dollar was under pressure on the comments, with the AUDUSD making an intra-day low to 0.867 levels before easing back on the losses.
Japan continues to play with the Yen as news reports that a senior LDP leader said that Shinzo Abe has decided for call for an election. USDJPY spiked to 115.85 on the rumors. However there is no official confirmation yet and the Yen is likely to react to continued rumors about the elections and the delay in the sales tax hike.
CPI data from the Eurozone including Germany and France saw actual CPI meet expectations while France’s CPI managed to improve coming in at 0.5% CPI y/y while estimates called for a softer reading to 0.4%. On a monthly basis however, France saw an unchanged price growth in the region. The Euro managed to push higher on the better than expected CPI data out of France.
The British Pound continues to remain subdued trading off the weakness set forth by yesterday’s BoE’s inflation report and the weakness is expected to continue through to today’s trading session. There were not much of fundamentals out of the European trading session and volatility remained subdued until the US trading session.
The Greenback reacted to comments from New York Fed President William Dudley who urged investors to be patient on the US interest rate hike timing. Ever since the Fed ended its QE3 purchases, markets have been speculating on the Fed’s interest rate hike which currently is expected to hike rates around mid 2015. The Fed’s outlook on the labor market was in line with expectations as unemployment rate ticked lower to 5.8% last month despite the number of jobs being added was below expectations.
The US weekly jobless claims came in at 290k vs expectations of 280k. Continuing claims also increased 2392k vs. estimates of 2346k while last week’s continuing claims was revised higher to 2356k from 2348k previously.
The other major news from the Fx markets that has been doing rounds is the record fines charges to top tier banks for spot fx manipulation. Banks such as Citigroup, RBS, JP Morgan, UBS were fined a record $3.4 billion in a year-long probe where the banks were accused of fixing the spot fx rates. UBS was also charged for misconduct into the bank’s precious metals trading. The record settlements marks the first of its kind in the forex markets where trading is unregulated and comes close on the heels of other scandals such as the LIBOR fixing scandal.
