Markets Afternoon Recap for January 8th 2015

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Key Markets Afternoon Notes:

  • Australia building approvals m/m rises 7.5% above estimates of -3%; annualized growth 10.1% vs. 1.2%
  • German factory orders m/m -2.4% vs. -0.8%; annualized -0.4% vs. 1% forecasts
  • Halifax house price index 3m/y 7.8% vs. 7.6%;
  • Eurozone retail sales 0.6% vs. 0.2% forecasts; yearly 1.5% vs. 0.2%
  • Eurozone PPI m/m -0.3% vs. -0.1%; y/y -1.6% vs. -1.4%
  • BoE leaves interest rates unchanged at 0.5%
  • US Weekly jobless claims 294k vs. 290k
  • Canada HPI m/m 0.1% as expected

The markets opened elevated after yesterday’s FOMC meeting minutes boosted the US equity markets higher after experiencing close to a 5-day slump. Asian and European equities were largely trading in the green as the US dollar was mixed in what follows a risk off event. The FOMC meeting minutes merely reiterated the Fed’s stand that there would not be any interest rate hikes before April this year, which puts the general market sentiment of an interest rate hike in Q2 this year.

The Australian dollar got a boost with better than expected building approvals beating estimates both on monthly and annualized prints.  The AUDUSD was lifted to make an intraday high to 0.81249 before easing from the highs to settle at 0.81 at the time of writing. The Kiwi dollar, was however choppy, starting the day at lows of 0.7619 only to rally making a session high of 0.78195.

The Japanese Yen was trading mostly off the broader market sentiment was looked weaker against its peers. USDJPY was currently trading near 119.8 levels and looks poised to reach to the upside towards 120.15 region.

Data from Eurozone today was mixed with retail sales rising above estimates to 0.6% on a monthly basis, perhaps boosted by December holiday sales. Producer Price Index, which gives an early insights into the CPI showed a marked slump as data posted negative reading, with PPI falling -1.6% on an annualized basis and worse than expected. Given the above data, it is likely that future CPI releases from the Eurozone will most probably see a further downward revision against the preliminary estimates published yesterday.

EURUSD was noticeably weak, breaking below the 1.18 barrier to hit the lows of 1.1768. Given the current trend, it wouldn’t be surprising to see further downside take shape with the potential to break below the 1.17 handle ahead of the US nonfarm payroll data due to be released tomorrow.

UK’s house price index from Halifax showed housing prices increasing to 7.8% but the British Pound was unchanged on the news ahead of the BoE’s monetary policy decision. The Cable was however weaker opening today’s trading session, drifting near intraday lows of 1.5035 levels. The Bank of England, as expected left interest rates unchanged as noted in our special report.

US weekly jobless claims rose above estimates of 290k to 294k which saw the Greenback give up some of its gains. At time of writing EURUSD, GBPUSD were pushing higher from intraday lows, while USDJPY was seen to be easing lower.

Canadian house price index managed to meet estimates rising 0.1%. The Loonie was little changed, trading mixed, stronger against the Euro and the Pound, but weaker against most of its peers.

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