Forex Afternoon Wrap – 11/11

UK Unemployment rate drops to 5.3%. Average earnings rises 3.0%

• Australia Westpac Consumer Confidence m/m 3.9% vs. 4.2% previously
• China Industrial production y/y 5.6% vs. 5.8%
• China retail sales y/y 11.0% vs. 10.9%
• UK Average weekly earnings 3m/3m 3.0% vs. 3.2%
• UK ILO Unemployment rate 5.3% vs. 5.4%
• UK Claimant Count change 3.3k vs. 1.4k
• ECB Draghi speaks

Later

• BoE’s Shafik speaks
• ECB’s Constancio speaks
• Australia PMI Business

The Asian trading session saw some much needed volatility as Bank of Japan’s Harada raked up some hawkish talk on monetary policy. Defending the BoJ’s stimulus program, Harada noted that the Central bank was in no rush to scale its QQE program in an effort to speed up inflation. He remained optimistic that inflation would hit the 2% target by March 2016 and talked down prospects of further easing from the BoJ, while attributing the low inflation to oil prices. The comments saw the Yen pick up its range. USDJPY has been trading in a tight right after touching highs of 123.5 early Monday.

Data from China included the industrial production which increased at a slower pace of 5.6%. The data showed the world’s second largest economy shift from an export oriented economy to that of a consumer led economy. This was aptly reflected in higher than expected retail sales numbers. The data obviously has little impact on the currency markets, although it is likely that further easing might be in store from the PBoC in the next few months with inflation continuing to stay low.

The Australian dollar is up 0.37% after the currency posted a low to 0.7043 before posting a modest recovery while the NZDUSD is up 0.45% for the day after dipping off session highs near 0.6586 earlier.

The European session was quiet with the markets geared up to the UK jobs report. Data was mixed as the UK’s unemployment rate fell to 5.3% from 5.4% previously but average earnings failed to rise to match the estimates of 3.2%, increasing only 3.0%. However, the data continues to show a steady pick up in the UK’s labour market. GBPUSD is up 0.42% for the day trading near 1.518 as the cable continues to post a modest recovery since Monday this week.

The Euro on the other hand is trading subdued, albeit the currency posted a session high to 1.076 before falling back to session lows of 1.0717. ECB’s Draghi is due to speak a the BoE conference in London but there has been little spoken about monetary policy. The French markets are closed today keeping trading very subdued.

The US trading session is also likely to be very quiet with most of the trading off on account of Veterans day in the US and Remembrance day in Canada. The US trading session also lacked the typical opening session volatility indicating that the remainder of the evening is likely to see subdued markets for the most part.