Forex Afternoon Wrap – 11th December

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Forex Afternoon Wrap

Forex Afternoon Wrap Key Notes

  • Japan core machinery orders m/m -6.4% vs. -2.1% estimates
  • Australia MI inflation expectations 3.4% vs. 4.1% previously
  • RBNZ Governor Wheeler sends mixed signals in his speech
  • Australia employment change 42.7k vs. 15.2k; unemployment rate 6.3%
  • German final CPI m/m 0%, CPI y/y 0.6%; French CPI m/m -0.2% vs. 0.2% estimates
  • SNB 3-month LIBOR rate <0.25%
  • Italy industrial production m/m -0.1% vs. 0.3%
  • ECB TLTRO 129.8bn vs. 148.2bn
  • BoC Governor Poloz speech
  • US Core retail sales m/m 0.6% vs. 0.5%; retail sales m/m 0.7% vs. 0.4%
  • US Weekly unemployment claims 294k vs. 299k

The Japanese Yen stabilized after its steep decline for the past two days. The USDJPY opened weak this morning but managed to make an intraday high towards 118.88 levels before easing back to the daily pivot level ahead of the US data release.

The Aussie and Kiwi dollar were active this morning as the Australia unemployment rate was mixed. While the employment changed managed to beat estimates, rising 42.7k above forecasts of 15.2k, the unemployment rate ticked lower meeting estimates of 6.3%. The Aussie was mixed across the board but gave up its gains during the start of the European trading session, declining as much as close to -0.4% for the day.

The Kiwi dollar was boosted by unchanged interest rates from the RBNZ and a speech by Governor Wheeler which was mostly mixed. In its monetary policy statement, the RBNZ maintained the phrase “further increase in the OCR is expected to be required at a later stage”, while at the same time highlighting the fact that the NZD’s exchange rate was still high.

The Swiss National Bank convened today for its monetary policy meeting and decided to leave interest rates unchanged, while reiterating that the SNB would look to additional tools, including negative deposit rates should the need arise. The Swiss Franc momentarily saw a brief rally on the central bank’s inaction.

Fundamentals from the Eurozone continued to point to the downside with German inflation numbers flat for the month while the French CPI m/m declined -0.2% against forecasts expecting to see a rise in inflation. The much anticipated TLTRO saw a lackluster pickup with bank loans totaling 129.8 billion Euros, less than the estimates of 149.2 billion Euros. The Euro single currency was little changed on the announcement.

Heading to the US trading session open, the retail sales data beat estimates rising 0.6% on core and 0.7% on the headline reading. Weekly jobless claims improved to 294k vs. 299k expectations. Continuing claims however rose above estimates to 251.4k vs. 234.4k expectations. The better than expected data managed to breathe some life into the US Dollar which was trading lower since the start of the week. EURUSD declined from intraday highs of 1.2495 to trade near 1.2429 but further weaknesses at the point of writing seems to be subdued in this pair. USDJPY was also little muted to the fundamentals from the US.

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