- US Dollar: S&P 500 Reverses and Points to Safe-Haven USD Demand
- British Pound Forecast Improves on Bank of England Interest Rate Expectations
- Euro Unable to hold Gains, Seems Likely to Hold Recent Trading Range
- Commodity Dollars Mostly Unchanged, Trade off of S&P 500, Gold, and Oil Prices
- Japanese Yen looks to Tankan Manufacturing Report
US Dollar: S&P 500 Reverses and Points to Safe-Haven Demand
The US Dollar saw another rollercoaster day of trade, falling sharply to monthly lows against the Euro in the overnight only to finish roughly unchanged through the New York close. A strong Retail Sales report and an uneventful Federal Open Market Committee decision had little net effect on US Dollar price action. Instead markets seemed content to keep the Euro/US Dollar within its recent choppy trading range. Market attention now turns to tomorrow’s US CPI inflation report, but a lackluster FOMC statement suggests the data will carry little importance and is unlikely to force major moves for the US Dollar.
The biggest surprise on the day was a stronger-than-expected US Advance Retail Sales report, which showed spending grew at impressive 0.8 percent through the month of November. A strong headline number coincided with a solid Ex Auto & Gas release, which similarly beat consensus forecasts of a 0.6 percent gain at 0.8 on the month. It is admittedly difficult to reconcile strong consumption figures given a noteworthy disappointment in employment through the same period. Yet it is difficult to deny that said numbers boost outlook for the broader economy, and we saw S&P 500 futures rally on the release.
Of course, the fresh highs in the S&P and Dow Jones Industrials Average were short-lived, as a post-FOMC sell-off left both indices roughly unchanged through the session close. Relatively illiquid market conditions warn against reading too much into intraday volatility. Yet such a bearish daily close on stocks bodes poorly for ‘risk’ going forward, and the US Dollar could benefit on a continued reversal.
Related: Discuss the Dollar in the DailyFX Forum, David Rodriguez’s Analyst Pick: Flat EURUSD, Hold on Re-Entry
British Pound Forecast Improves on Bank of England Interest Rate Expectations
The British pound saw intense volatility through European Trade, initially setting monthly highs against the US Dollar on surprising economic data. Yet a later Greenback reversal left the GBPUSD almost squarely where it traded 24 hours prior. UK Consumer and Retail Price Index data surprised to the topside and led to a jump in interest rate forecasts. Overnight Index Swaps now show that 12-month rate expectations trade at their highest since May, which can only boost the British Pound’s stance against the US Dollar. It remains to be seen whether this will be enough to force the Bank of England into near-term action, and tomorrow’s UK Jobless Claims data may prove pivotal in setting interest rate expectations rolling forward.
Related: Trade UK Initial Jobless Claims Data Live with DailyFX Analyst Michael Wright
Euro Unable to hold Gains, Seems Likely to Hold Recent Trading Range
The Euro finished the day almost exactly where it began, initially rallying on speculation that the Euro Zone could expand funds available in the European Financial Stability Fund (EFSF). European Central Bank president Jean Claude Trichet called for the region to give “maximum flexibility and … maximum capacity quantitatively and qualitatively” to the EFSF. Markets initially bid the Euro higher on thinking that such expansion of the program was underway, but comments from a German official all but quashed such rumors and forced EURUSD pullbacks. Going forward it will be important to watch results in tomorrow’s Euro Zone Employment numbers, but it may take a particularly sizable surprise to force any event-driven moves in EUR pairs.
Commodity Dollars Mostly Unchanged, Trade off of S&P 500, Gold, and Oil Prices
The Commodity Bloc of currencies remained mostly unchanged in the past day of trade, shifting on moves in the similarly choppy S&P 500 and broader commodity markets. Silver prices saw a noteworthy overnight rally on speculation that JP Morgan was unwinding part of its allegedly massive short position in the futures market. We are hardly conspiracy theorists at DailyFX, but such theories usually have at least a grain of truth behind them. Thus if JP Morgan holds anything close to its purported Silver futures short, buying into a generally strong market can only produce further rallies and elicit similar moves in Gold and other metals. Currency correlations to Gold have been somewhat shaky as of late. Yet we suspect any especially sharp precious metal rallies would lead to short-term Australian Dollar gains.
Japanese Yen looks to Tankan Manufacturing Report
A historically market-moving Japanese Tankan Large Manufacturers Index could force near-term volatility across Japanese Yen pairs. The Asian currency remains in a choppy but relatively narrow range against the US Dollar, generally trading off of developments in US markets and less so on domestic event risk. Yet the correlation between the USDJPY and its respective government bond yields trades near record-highs, and we could see some JPY moves if the report forces moves in JGB yields. The recent rally in US Treasury bond yields has generally led to USDJPY strength, and we expect such trends to continue amidst continued weakness in UST’s and subsequent jump in rates.
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ECONOMIC DATA
Next 24 Hours
|
Currency |
GMT |
Release |
Survey |
Previous |
Comments |
|
AUD |
23:30 |
Westpac Consumer Confidence (DEC) |
-5.3% |
Dipped in November to a five-month low. |
|
|
AUD |
23:30 |
Westpac Consumer Confidence Index (DEC) |
110.7 |
||
|
JPY |
23:50 |
Tertiary Industry Index (MoM) (OCT) |
0.2% |
-0.9% |
Fell following 3-month rise. |
|
JPY |
23:50 |
Tankan Large All Industry Capex (4Q) |
2.6% |
2.4% |
To show that sentiment among large manufacturers declined for the first time in seven quarters, according to economists’ estimates. |
|
JPY |
23:50 |
Tankan Large Manufacturers Outlook (4Q) |
0 |
-1 |
|
|
JPY |
23:50 |
Tankan Large Manufacturers Index (4Q) |
3 |
8 |
|
|
JPY |
23:50 |
Tankan Non-Manufacturing Outlook (4Q) |
-3 |
-2 |
|
|
JPY |
23:50 |
Tankan Non-Manufacturing Index (4Q) |
0 |
2 |
|
|
AUD |
0:00 |
DEWR Skilled Vacancies (MoM) (DEC) |
-1.0% |
Declined in last six months. |
|
|
AUD |
1:30 |
New Motor Vehicle Sales (MoM) (NOV) |
-0.6% |
Fell in October after two-month rise. |
|
|
AUD |
1:30 |
New Motor Vehicle Sales (YoY) (NOV) |
3.5% |
||
|
EUR |
7:00 |
EU 25 New Car Registrations (NOV) |
-16.6% |
Dropped last seven months. |
|
|
EUR |
9:00 |
Italian Trade Balance (Total) (euros) (OCT) |
-1642M |
-3187M |
Deficit widened in Sept to largest since January. |
|
EUR |
9:00 |
Italian Trade Balance EU (euros) (OCT) |
-440M |
||
|
GBP |
9:30 |
Jobless Claims Change (NOV) |
-3.0K |
-3.7K |
Unexpectedly fell in Oct. for the first time in 3 months. |
|
GBP |
9:30 |
Claimant Count Rate (NOV) |
4.5% |
4.5% |
|
|
GBP |
9:30 |
Avg Weekly Earnings inc Bonus (3MoY) (OCT) |
2.1% |
2.0% |
Have not declined since three months ended 03/09. |
|
GBP |
9:30 |
Avg Weekly Earnings ex Bonus (3MoY) (OCT) |
2.4% |
2.2% |
|
|
GBP |
9:30 |
ILO Unemployment Rate (3M) (OCT) |
7.7% |
7.7% |
Lowest level since 2009. |
|
EUR |
10:00 |
Euro-Zone Employment (QoQ) (3Q) |
0.0% |
Declined annually in the last seven quarters. |
|
|
EUR |
10:00 |
Euro-Zone Employment (YoY) (3Q) |
-0.7% |
||
|
CHF |
10:00 |
ZEW Survey (Expectations) (DEC) |
-30.9 |
At lowest since March 2009. |
|
|
GBP |
11:00 |
CBI Reported Sales (DEC) |
38 |
43 |
Remains off Sept 6-yr high. |
|
USD |
12:00 |
MBA Mortgage Applications (DEC 10) |
-0.9% |
Fell as refinancing declined. |
|
|
13:30 |
Manufacturing Shipments (MoM) (OCT) |
1.0% |
-0.6% |
Fell less-than-forecast last month. |
|
|
USD |
13:30 |
Consumer Price Index (MoM) (NOV) |
0.2% |
0.2% |
U.S. consumer prices rose less than forecast in October and core-inflation increased only 0.6% from the year prior, the smallest gain on record. Prices were restrained by cheaper vehicles, clothing, and tobacco. |
|
USD |
13:30 |
Consumer Price Index (YoY) (NOV) |
1.1% |
1.2% |
|
|
USD |
13:30 |
Consumer Price Index Ex Food & Energy (MoM) (NOV) |
0.1% |
0.0% |
|
|
USD |
13:30 |
Consumer Price Index Ex Food & Energy (YoY) (NOV) |
0.6% |
0.6% |
|
|
USD |
13:30 |
Consumer Price Index Core Index s.a. (NOV) |
221.765 |
||
|
USD |
13:30 |
Consumer Price Index n.s.a. (NOV) |
218.6 |
218.711 |
|
|
USD |
13:30 |
Empire Manufacturing (DEC) |
5.00 |
-11.14 |
Nov reading lowest in 19mo |
|
USD |
14:00 |
Net Long-term TIC Flows (OCT) |
$81.0B |
Demand for U.S. assets declined in September. |
|
|
USD |
14:00 |
Total Net TIC Flows (OCT) |
$51.0B |
$81.7B |
|
|
USD |
14:15 |
Industrial Production (NOV) |
0.3% |
0.0% |
Unchanged in October after September decline. |
|
USD |
14:15 |
Capacity Utilization (NOV) |
75.0% |
74.8% |
|
|
USD |
15:00 |
NAHB Housing Market Index (DEC) |
16 |
16 |
Increased in the last two mo |
|
USD |
15:30 |
DOE U.S. Crude Oil Inventories (DEC 10) |
-2500K |
-3819K |
U.S. crude inputs were higher than the week prior as refineries operated at 87.5% of operable capacity. |
|
USD |
15:30 |
DOE U.S. Gasoline Inventories (DEC 10) |
2000K |
3811K |
|
|
USD |
15:30 |
DOE U.S. Distillate Inventory (DEC 10) |
0K |
2154K |
|
|
NZD |
21:30 |
Business NZ Perf of Manufacturing Index (NOV) |
49.7 |
Highest reading since July. |
|
|
Currency |
GMT |
Upcoming Events & Speeches |
|||
|
USD |
13:25 |
Fed’s Dennis Lockhart Speaks on U.S. Economy |
SUPPORT AND RESISTANCE LEVELS
CLASSIC SUPPORT AND RESISTANCE – 18:00 GMT
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist 2 |
1.3840 |
1.6420 |
89.00 |
1.0460 |
1.0922 |
1.0600 |
0.8230 |
127.60 |
146.05 |
|
Resist 1 |
1.3700 |
1.5910 |
86.00 |
1.0000 |
1.0750 |
1.0200 |
0.8000 |
120.00 |
140.00 |
|
Spot |
1.3396 |
1.5868 |
83.41 |
0.9678 |
1.0075 |
0.9965 |
0.7559 |
111.74 |
132.36 |
|
Support 1 |
1.3000 |
1.5500 |
80.00 |
0.9500 |
0.9950 |
0.9600 |
0.6850 |
103.80 |
125.00 |
|
Support 2 |
1.2925 |
1.5300 |
75.00 |
0.9000 |
0.9700 |
0.9375 |
0.6585 |
100.00 |
119.00 |
CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT
|
Currency |
USD/MXN |
USD/TRY |
USD/ZAR |
USD/HKD |
USD/SGD |
Currency |
USD/SEK |
USD/DKK |
USD/NOK |
|
Resist 2 |
14.4500 |
1.6755 |
8.7915 |
7.8165 |
1.4945 |
Resist 2 |
7.7500 |
5.7800 |
6.2750 |
|
Resist 1 |
13.8500 |
1.5125 |
8.3675 |
7.8075 |
1.4655 |
Resist 1 |
7.5800 |
5.5400 |
6.1150 |
|
Spot |
12.3946 |
1.5055 |
6.8361 |
7.7782 |
1.3036 |
Spot |
6.8377 |
5.5642 |
5.9201 |
|
Support 1 |
12.0500 |
1.3665 |
6.6950 |
7.7490 |
1.2750 |
Support 1 |
6.4500 |
5.2625 |
5.7030 |
|
Support 2 |
11.7200 |
1.3475 |
6.4300 |
7.7450 |
1.2500 |
Support 2 |
6.1250 |
5.1000 |
5.5200 |
INTRA-DAY PROBABILITY BANDS 18:00 GMT
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
|
Resist. 3 |
1.3562 |
1.5939 |
84.65 |
0.9708 |
1.0170 |
1.0129 |
0.7628 |
113.49 |
133.72 |
|
Resist. 2 |
1.3515 |
1.5897 |
84.40 |
0.9679 |
1.0143 |
1.0094 |
0.7601 |
113.09 |
133.27 |
|
Resist. 1 |
1.3469 |
1.5855 |
84.15 |
0.9650 |
1.0116 |
1.0059 |
0.7575 |
112.69 |
132.82 |
|
Spot |
1.3376 |
1.5770 |
83.65 |
0.9593 |
1.0063 |
0.9990 |
0.7522 |
111.89 |
131.91 |
|
Support 1 |
1.3283 |
1.5685 |
83.15 |
0.9536 |
1.0010 |
0.9921 |
0.7469 |
111.09 |
131.00 |
|
Support 2 |
1.3237 |
1.5643 |
82.90 |
0.9507 |
0.9983 |
0.9886 |
0.7443 |
110.69 |
130.55 |
|
Support 3 |
1.3190 |
1.5601 |
82.65 |
0.9478 |
0.9956 |
0.9851 |
0.7416 |
110.29 |
130.10 |
v
Written by: David Rodríguez, Quantitative Strategist for DailyFX.com
To submit Questions or Comments about an article; email drodriguez@dailyfx.com
