Forex Afternoon Wrap for 5th February 2015

Key Forex Afternoon Notes:

• Australia retail sales m/m 0.2% vs. 0.3%
• German factory orders m/m 4.2% vs. 1.5%; y/y 3.4% vs. 0.7%
• EU Economic forecasts
• BoE rate 0.5%, unchanged
• US initial jobless claims 278k vs. 290k
• US trade balance -46.6bn vs. -38bn
• Canada trade balance -0.65bn vs. -1.2bn

The Asian trading session started off on a quiet note moving off the larger themes. Australian retail sales m/m fell short of expectations rising 0.2%, below estimates. The Aussie dollar was quite choppy yesterday after trimming most of its gains, trading back near the lows after the RBA’s rate cut earlier this week. With no news from Japan, New Zealand or China, the markets were largely stable heading into the NFP event due tomorrow.

The Japanese Yen was seen stronger against most of its peers as the ensuing uncertainty surrounding Greece’s debt negotiations continue on.

The European session saw the German factory orders beat estimates, rising 4.2% on the monthly and 3.4% on the yearly basis. The Euro was however little changed, trading weaker after news emerged late last night that the ECB was going to cut off funding for the Greece banks. After briefly spiking to 1.15 levels, the Euro trimmed its gains against the Greenback, falling back near the 1.13 levels during early European trading session.

The EU economic forecast was upbeat, which managed to support the Euro against most of its peers. The ECB expects inflation to rise from 2015 – 2016 periods as it sees a gradual increase in crude oil prices. In regards to the Eurozone’s growth, the staff expects 1.7% growth in 2015 and 2.1% in 2016. The Euro briefly managed to rise above 1.14 handle on the news.

The main event of the day was the Bank of England’s interest rate decision, which left its policy unchanged. The British Sterling was practically muted to the news event. While stronger against the Greenback, the Sterling was weaker against the Euro ahead of the US trading session. The GBPUSD briefly spiked higher trading above 1.527 levels ahead of the US data release.

Markets in the US kicked off with the weekly jobless claims posting better than expected numbers. The number of initial jobless claims seekers rose by 278k, below estimates of 290k. The Greenback was broadly mixed on the news as it weakened against the British Sterling while staying flat against the Euro and the Japanese Yen.