Forex Trading Library

Forex Afternoon Wrap for 7th January

0 162

Key Forex Afternoon Notes:

  • Australia AIG services index 47.5 vs. 43.8 previously
  • New Zealand ANZ commodity prices m/m -4.4% vs. -1.6% previously
  • German retail sales m/m 1% vs. 0.2% forecast
  • Eurozone CPI flash estimates y/y -0.2% vs. 0% forecast; Core CPI y/y 0.8% vs. 0.6%
  • Eurozone unemployment rate 11.5% as expected
  • Italy prelim CPI m/m 0% vs. -0.2%
  • US ADP nonfarm employment change 241k vs. 227k
  • Canada trade balance -0.64bn vs. -0.2bn
  • US trade balance -39bn vs. -42.3bn

Trading was choppy for most part of the data as the markets focused on the Eurozone CPI data. Early into the Asian trading session, the Yen started the day on a stronger note, making an intraday high to 119.2. USDJPY was currently trading at these levels ahead of the ADP jobs report and trade balance data from the US. Commodity risk currencies, the Aussie and Kiwi gave up the gains from yesterday and were seen to be trading weaker against the Greenback.

Data from Eurozone included German retail sales which trumped estimates posting 1% growth, while the unemployment change also showed marginal improvements. The focus however was the CPI data for the Eurozone and Italy. Headline CPI fell -0.2%, below expectations but Core CPI managed to rise to 0.8% on an annualized basis. Italy’s CPI for the month remained flat. However, considering that these are merely preliminary estimates, expect to see revised CPI data in the coming weeks.

The Euro was subdued across the board, weaker against most of its peers. An attempt to stage a rally fell through after EURUSD made an intraday high to 1.1895 before giving up its gains to settle for 1.184 at the time of writing. The Cable continued its downtrend easing to make an intraday session low to 1.5106 at the time of writing.

The Euro and the British Pound will be looking to the US data followed by the December FOMC meeting minutes which could bring some volatility back to the table.

The Canadian dollar, which weakened significantly yesterday managed to trim its losses especially against the weaker Euro, while remaining subdued against the stronger Greenback and the Aussie Dollar.

Gold prices eased back from yesterday’s highs of 1222 levels but well positioned trading above the $1200 handle. As long as the precious metal continues to trade above $1200, we can expect to see some movement to the upside.

Crude oil futures managed to rally after hitting session lows and posting fresh yearly lows at 47.32, rising to as much as 49.20. But the overall bearish trend continues to prevail.

ADP jobs report for the month of December showed the private sector hiring rose by 241k, beating estimates of 225k – 227k. Previous month’s jobs numbers were also revised higher from 208k to 227k, showing that the US labor market was well above its yearly trend.

Trade balance from Canada widened in the month of December by -0.64bn rising above estimates of -0.20bn, while trade balance deficit from US decreased -39bn against estimates of -42billion.

The better than expected news releases from the US helped support the Greenback as it positions itself strongly heading into the FOMC meeting minutes due to be released later this evening.

Leave A Reply

Your email address will not be published.