Forex Trading Library

Forex Afternoon Wrap – 12/05

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Key Notes:

  • UK BRC retail sales monitor y/y -2.4% vs. 3.2%
  • Australia home loans m/m 1.6% vs. 1.1%
  • New Zealand REINZ HPI m/m 0.5% vs. 6.75%
  • Japan leading indicators 105.5% vs. 105.5%
  • UK manufacturing production m/m 0.4% vs. 0.4%
  • UK industrial production m/m 0.5% vs. 0%
  • Australia annual budget release

Later:

  • US NFIB small business index
  • US JOLTS job openings

Greenback turns weak intraday. Aussie Dollar outperforms

The currency markets opened the Asian trading session with data from Australia home loans rising 1.6%, beating estimates of 1.1%. Earlier in the day, Fitch, ratings agency reiterated the ‘AAA’ rating for Australia and noted that the investment grade rating was under no threat. This comes ahead of the Australian Government releasing the annual budget. Combined, the data was positive for the Australian Dollar, as the AUDUSD was back trading above 0.79 handle and looks poised to test the 0.80 level in the near term.

The Kiwi Dollar managed to trim some of its losses from the previous weeks ahead of the RBNZ’s Financial stability report due to be released in the early hours of the Asian trading session tomorrow. The kiwi reversed its losses after hitting a low of 0.7328 led by the weakness in the Greenback. At the time of writing, NZDUSD was trading at 0.737 and could look to test to the previously broken support level at 0.744 should the low hold.

The Japanese Yen was relatively weaker across the board with the stronger currencies making gains against the Yen. The GBPJPY was also one of the top performing currency pair for the day as prices rose close to 0.62% for the day.

The European trading session did not see any major economic data. However, the Euro managed to gain a strong foothold against a weaker Greenback, early into the European trading session. EURUSD surged close to 0.73% for the day, trading near previous highs of 1.12. However, as noted in our daily technical report, unless EURUSD breaks above this high of 1.12547, we can expect to see a short term decline towards 1.10 on break of previous support/resistance level at 1.117.

From the UK, manufacturing and industrial production managed to beat estimates rising at the fastest pace in six months. The British Pound, which was already trading stronger post the UK election outcome, saw a fresh boost to the bullish rally. The Cable was seen trading near 1.566 after breaking the resistance at 1.55. Overall, the British Pound managed to gain across the board as economic data continues to keep the currency lifted.

The Greenback, which saw close to three days of gains turned weaker as the Index turned around lower and looks poised to erase some of its previous gains. At the time of writing, the US Dollar index was seen trading at 94.55. A close below 93.92 is required followed by a close below 93.8 in order to ascertain further weakness in the Greenback. There is not much of major market moving events from the US today with the exception of the JOLTS job openings and the small business index.

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