With the ECB Governing Council member, Ewald Nowotny, saying that the market expected too much from the central bank while forecasting monetary easing measures and the bank was right in its place, the EUR got another boost on Wednesday while the USD again had to witness alternative downside. The JPY remained dear to the market players as current uncertainty ahead of next week’s FOMC and a bit of pullback in to the commodity markets favored the export-oriented nation while the GBP remained sluggish with no major economics to track.
Monetary policy meeting by the RBNZ proved to be a strong point for the NZ even if it cut the interest rate as the central bank Governor signaled that no more interest rate cuts are necessary to achieve the target inflation rate. The bank also raised GDP forecast to 2.4% for Q1 2016 against previous 2.2% estimations while it also said that it could reach the 2.0% inflation target during the fourth quarter of the next year, against previously estimated date of Q3 2016. The AUD also witnessed pleasant surprise as the nations employment change extended its rally against a forecasted dip and the unemployment rate dropped further while the Crude prices, after witnessing initial pullback closed again on the negative side even after unexpected drawdown in U.S. crude inventories as distillate stocks rose.
Today being a central bankers’ day, after the RBNZ, the SNB and the BoE are likely to govern the market moves. Moreover, UK trade balance and the US jobless claims are some of the minor releases to witness. Even if the current flow of the market is against USD, chances of its reversal become stronger day by day as we come closer to the FOMC. Hence, it would be better not to put too much on the USD sell side while GBP may reverse its immediate downside as the BoE may pedal some hawkish words.
Even after the US Jobless Claims rallied to the highest levels since late-July, the USD managed to register first positive daily closing on Thursday as the world is coming closer to the crucial FOMC next week which will trigger Fed rate hike for the first time in a decade; moreover, consumer-centric details, scheduled for today’s release, are also expected to provide greenback a positive ride. Recent surge by the euro lost momentum after ECB policymaker, Erkki Liikanen, spread dovish comments while JPY also adhered to downside after Manufacturing Index signaled weakness. Moreover, Crude prices suffered sixth straight day of declines as the global supply glut persists while the Chinese Yuan tested lowest in 4.5 years as economic growth seems slowing further, providing additional damages to the NZD, CAD and AUD.
During early Friday, German Final CPI matched 0.1% forecast while WPI again plunged into negative region. Market players are more likely to concentrate more on the only US economics scheduled during the week that would be out during the later part of the day, namely Retail Sales, PPI and Consumer Sentiment. The consensus favor marking an optimist numbers by these indicators and may help them support the greenback’s recent to achieve weekly advance.
With the FOMC approaching next week, it would be in the best interest of the market players to wait for the actual outcome prior to taking any trades; however, a risk taker may buy the USD prior to Fed meeting and enjoy gains with tight stop-losses.
Even after upbeat printing Retail Sales & PPI numbers, the US Dollar headed for the second weekly decline ahead of the much awaited FOMC meeting as market players remained worried about the consecutive rate hike pattern after the first in a decade interest rate lift take place during the current week while the EUR extended its short-covering rally, following the ECB’s disappointment, even with no major releases. The JPY rallied heavily against majority of its counterparts after market participants run for safe haven ahead of the FOMC while the GBP flashed mixed signals with a greater decline in Manufacturing Production and a bit hawkish BoE tone. Moreover, the commodity currencies, namely NZD, AUD and CAD, extended their downside as Crude prices plunged with EIA forecast favoring extended supply glut while People’s Bank of China (PBOC), during its Friday meeting, said that the currency’s strength shouldn’t only compared with USD, to which market reacted negatively and ignored five month high Industrial production release by China.
During the early week, the quarterly release of the Bank of Japan’s “tankan” survey revealed that the Japanese firms are planning to hold their large investment intact; though, they were worried about the economic outlook. Market players are more likely to concentrate on ECB President, Draghi’s speech during the rest of the day and look for the clues to liquidate their recent EUR buying.
However, major attention would continue to rely upon the Wednesday’s FOMC outcome, which also accompanies Fed’s economic forecast and followed by press conference by the Fed Chair. Should there be a disappointment, either through downgrading economic forecast, or a slower future guidance on interest rate hike, the USD is more likely to react passively to the news as the interest rate hike seems already priced-in. Hence, it would be in the best interest of the market players to cut their larger positions and wait for the outcome of this crucial event than to take an immediate step in greed.
The US Dollar printed a lesser change on a closing basis during its Monday trading as market players remained cautious about the Wednesday’s policy meeting outcome while GBP rallied against majority of its counterparts as Rightmove HPI shrank lesser than prior -1.3% with -1.1% print. Further, the JPY was a bit weaker as pessimism triggered by BoJ’s quarterly Tankan survey results, published on Monday, favored less of JPY buying while the NZD rallied across the board due to improvement in dairy prices. The Chinese Yuan, however, kept trading in losses for the eighth consecutive day, the longest losing streak since June, as PBOC seems favoring weaker currency and driving down the reference rate. The Crude prices halted its plunge on Monday and favored a bit of pullback in majority of commodity currencies; however, the same couldn’t be sustained on Tuesday and the black gold kept extending its southward trajectory on Tuesday.
During early Tuesday, minutes of the RBA’s December 01 meeting revealed that the economy is on positive trade with impressive data points; however, subdued inflation could force the central bank to break its seven month halt to interest rate cut, if needed. Moreover, lesser than previous Australian HPI and upbeat motor vehicle sales helped AUD register some gains during early trading sessions.
For the rest of the day, CPI from UK and US, coupled with German and EU ZEW releases and US Empire State Manufacturing Index, are likely to provide data points to fuel Forex volatility. If the US CPI prints an impressive mark, chances of hawkish FOMC statement becomes brighter and can strengthen the greenback. Moreover, another pessimistic reading by the UK CPI would magnify the GBP downside while commodity markets are likely to remain largely on the downside with no major economic changes to observe.
With the inflation numbers matching forecasts; though, being lower than what the Fed’s target is, the US Dollar Index (I.USDX) got a reason to register positive daily closing; moreover, lesser than forecast contraction in Empire State Manufacturing Index helped the greenback stretch its gains. The GBP, even after registering four month high CPI, failed to impress market players and remained weaker as PPI plunged to the lowest in three months while improvement in ZEW economic sentiment indices from EU & Germany kept favoring the regional currency, EUR. Moreover, the JPY remained weaker as rise in Crude prices, coupled with nearness to FOMC, caused market players to go for risk-bearing assets than the safe-havens like JPY. The commodity currencies, however, remained worried about the Chinese pessimism and maintained their downside.
During the early part of the crucial FOMC day, Wednesday, Flash Manufacturing & Services numbers from Germany favored the EUR strength while EU numbers and the UK labor market details, coupled with EU Final CPI & US Housing market details, are likely to govern the intermediate market moves earlier than the day-end’s Fed decision.
Going with majority of market forecasts, the Fed is almost likely to hike an interest rate by 0.25%; however, the tone of the Fed Chair, during press conference, and the Fed’s economic forecast, would carry higher importance in addition to the future rate hike plan. Though, a disappointment to postpone the rate hike towards January or early 2016 would carry higher risk for the USD and may trigger considerable downside for the greenback. Hence, it would be in the best interest of the market players to wait for the actual outcome of this crucial event and then let the market stabilize prior to taking any trades or else it won’t take much time for your trading account to get wiped out.
The US Federal Reserve, lead by the Janet Yellen, finally managed to announce first in a decade interest rate hike to the global economy with slightly upbeat tone relating to the strength of the US economy, helping the greenback to extend its recent up-move; however, the central banker kept repeating its words that further rate hike would come gradually as and when needed. The quarterly economic forecasts by the FOMC remained mostly unchanged with unemployment anticipated to fall to 4.7% in 216 and economic growth marking 2.4% advance. The move was better than the dovish lift-off expectations and helped global markets, with the leads taken by the US fronts. The Euro, which gained during early trading sessions with Greek parliament approving a bill containing reforms demanded by the country’s international lenders, CPI surpassing initial 0.1% forecast with +0.2% mark and an improvement by Flash PMIs, registered considerable downside due to contrast monetary policy than the Fed while the GBP remained weaker with higher Claimant Count Change and lesser than forecast earnings rise. Moreover, the JPY remained weaker with less of safe-haven demand while the NZD and AUD gained with a bit of commodity price rise and a halt in Yuan’s plunge.
Having witnessed the biggest event of the year, which matched forecasts, the market players are more likely to keep favoring the USD with Fed Chair being loud mouthed on US economic recovery while German Ifo Business Climate, UK Retail Sales and US Philly Fed Manufacturing Index, are some of the left-ones economic details that could continue fueling today’s Forex moves.
Given the UK Retail Sales, generating higher portion of Britain’s GDP, reverses prior -0.6% with forecasted +0.6% advance, chances of the GBP recovering some of its recent losses can’t be denied; however, improvement in German reading isn’t expected to help the EUR with a big bash. Moreover, the commodities front may re-join their southwards trajectory as stronger USD could further curb the demand side while the supply side, especially for Crude, being overloaded.
Even with a negative print of US Philly Fed Manufacturing Index, the US Dollar extended its recent up-move towards testing the two weeks’ high as USD bulls kept celebrating the Fed rate hike with greenback buying, providing additional weakness to the EUR; moreover, weaker than expected German Ifo Business Climate Index extended support to Euro bears. The GBP closed in a negative territory even with the annual retail sales growth exceeding 5% in the past three months while the JPY remained weaker ahead of the BoJ and market players’ shift in risk appetite. Moving on, the AUD, CAD and the NZD stretched their recent downsides with weakness in commodity prices, mainly driven by the Crude which got another shock of supply glut with higher than expected US crude stockpiles.
During the early Friday, the New-Zealand ANZ Business Confidence rallied to the highest levels in eight months while the Bank of Japan surprised forex market with operational changes in its ETF and funds buying pattern with including some of the longer-term maturing assets in addition to taking part in equity markets buying. The market reflected with the stronger buying of JPY and favored the NZD as well; however, the USD bulls seems fading and the greenback have lost its strength since the early day trading session.
For the rest of the day economic calendar is silent and is less likely to trigger any major changes except in the CAD wherein the Canadian CPI & Wholesale Sales would help determine the moves of the Canadian currency. Moreover, the market have finally reversed against the USD and should this pattern continues, as with no economics it is more expected, the greenback may lost its weekly gains and could reverse to no-gain zone on weekly basis.
With the much awaited interest rate decision by the Fed announced during last week, coupled with somewhat hawkish tone of the Fed Chair who kept saying a “moderate” economic growth, helped the US Dollar stop its previous two weeks’ decline and pushed to the first positive weekly closing. The Euro, however, witnessed side-effects of the same with contrasting monetary policy of the ECB as compared to the Fed. One of the ECB board member Peter Praet, also an economist of the central bank, said in his interview with a Belgian newspaper that the ECB would continue following easy monetary policy as long as possible due to slower growth in emerging markets hurting the region’s economy as well. The JPY witnessed upside during weekend after the BoJ’s outcome which mentioned a change in its massive stimulus program rather than altering the amount of monetary aid to the economy while the NZD extended its gains against majority of its counterparts as dairy prices kept improving; however, the AUD and CAD, coupled with the major commodity prices, including Copper and Crude, maintained their downturn due to global supply glut and Chinese pessimism. The Crude prices plunged to the lowest since 2004 as suppliers from the Middle East to the U.S. are likely to keep pumping record supply glut to fight for market share.
During the late-weekend, also the early Monday, the New-Zealand Westpac Consumer Sentiment remained ahead of its previous mark and helped the Kiwi extend its recent gain series while highest print of Japanese All Industries Activity Index since December 2014 propelled JPY up-move. German PPI and EU Consumer Confidence are some of the economic details scheduled for release today that could deliver EUR moves while major news are absent from the calendar and can continue favoring less liquidity into the world’s largest financial market.
With the holiday shortened week, including Christmas, majority of the market players are in celebration mood and have little news from the economic side; hence, the market is less likely to witness much of the volatility during the current week. However, this doesn’t restrict the year-end flow of marketers who wish to exit from their running losses or lock their current profits as the year comes to an end. Hence, a slightly weaker economic growth number from the US could harm its recent gain and may pull it towards negative weekly closing.
Even if the Federal Reserve Bank of Atlanta President, Dennis Lockhart, said in an interview Monday with WABE, the Atlanta public broadcasting radio station that the Fed’s ‘Gradual’ interest rate hikes may be at every-other meeting, depending upon the data, the USD failed to register a daily positive closing as year-end profit booking moves dragged down the greenback. The Euro, remained firm on short-covering and an inconclusive results of Spanish election while the JPY and the GBP maintained its up-move following no major releases due to USD weakness. Moreover, NZD and AUD, maintained their upside while the CAD also got support from the a halt in Crude plunge due to winter demand.
After the UK GfK Consumer Confidence and Chinese CB Leading Index printed better than expected & prior numbers during their early Tuesday releases, market players extended their support in favor of commodity currencies and GBP. However, final version US Q3 2015 GDP, scheduled for release during the later part of the day, may help the greenback gain its recent losses.
In addition to the US GDP, the Existing Home Sales and NZD Trade Balance are some other details that could offer liquid forex session during the rest of the Tuesday; though, chances of greenback’s downside to extend are higher as market players are in mood to lock their profit ahead of Christmas holiday season. Moreover, a weaker prints by the scheduled US releases may give some more reasons for the USD bears to extend their profit booking moves and add into the December decline of USDX which is likely to register largest losses since April.
Even if the Q3 2015 US GDP grew 2.0%, due to three month high consumer spending number of 0.3%, after the GDP rose 3.9% during previous quarter, the US Dollar failed to close on a positive note during Tuesday as Sales of US Existing Homes slumped in November to 4.76M against 5.32M prior, the lowest level since April of last year. The Euro, even if trading volatile due to Spanish uncertainty, completed the day on a positive side as weaker USD favored year-end buying in the regional currency while the GBP kept extending its downside. Moreover, the JPY remained firm with safe-haven buying and a positive outlook for the nation ahead of the end of 2015 and the commodity currencies, namely AUD,NZD and CAD, witnessed an upside closing with a bit of pullback in commodity basket while surprise dip in U.S. inventories, as released by the US API, coupled with the potential for more exports in an oil market due to winter season, helped the Crude prices register first positive daily closing in previous five during Tuesday.
During early Wednesday, the NZD Trade shrank to the lowest in four months while Japanese markets are closed due to Emperor’s Birthday. Though, UK GDP, Current Account, Canadian GDP, Retail Sales and US Durable Goods Orders, coupled with US New Home Sales details, are some of the important details that could provide important moves during the rest of the day.
As the year comes to an end most likely that the market players would leave trading aside and enjoy the Christmas celebrations; however, downbeat US economics could provide them a chance to liquidate some more of their early month USD buying. Hence, it would be in the best interest to stay away from the market except a few trades based on the economic data which is more likely to cut down the GBP and USD.
Even if the US Core Durable Goods Orders registered decline and the prior Durable Goods Orders also revised down, the US Dollar managed to mark a positive daily closing as improvement in New Home Sales and Consumer Sentiment Index helped the greenback get a push during holiday thin trading sessions. The Euro remained sideways with no major economic readings while CAD remained strong with better than expected GDP and Retail Sales mark. Moreover, the GBP maintained its downside with downbeat GDP while the JPY kept strengthening against majority of its counterparts with the Japanese government announcing record fiscal 2016 budget that counts on higher growth and tax revenue. The Crude prices revived due to consecutive cut in US Rig counts and ignored that OPEC forecast of higher demand drop.
With the major markets observing close earlier that Christmas, there are nothing major to review during the rest of Thursday, favoring less liquidity and higher chances of continued trading pattern established during the early week days. Hence, it would be in the best interest of the market players to enjoy the holiday season rather than concentrating on market events. However, tomorrow’s Japanese details relating to Inflation, Unemployment and Spending could become important to determine near-term JPY moves.
Last week, soft US economic details pushed US Dollar downwards while the EUR and JPY remained mostly firm against majority of its counterparts even with the holiday thinned trading restricted big moves. The antipodeans, namely AUD, NZD and CAD, all gained as commodity basked gained during the year-end moves while the Crude registered its largest weekly gain in four months as U.S. inventories declined and the number of drilling rigs fell. Moreover, the GBP maintained its downturn with weaker than expected GDP mark favoring no interest rate hike by the BoE till early 2017.
Looking ahead, Japanese Retail Sales and Industrial Production, published during late last week, indicated that the export-oriented nation is still struggling and more of monetary policy easing is required by the BoJ, resulting a bit of pullback on JPY during early Monday. However, close of UK & Canadian markets, coupled with nearness to year-end celebrations, keep favoring the partying mood of the market players and may result in another week of low forex market liquidity.
However, the US economic calendar is the only one, except the Chinese official PMIs, to have important economics scheduled during the week. Hence, continued downbeat prints of the US details may further push the greenback towards south.
As we enter the final trading days of 2015, global financial market trading is dull as majority of market players are busy celebrating year-end while some of them who are still active adhere to profit booking/locking in search of risk aversion, favoring JPY. The USD remained inactive with little gains against majority of its counterparts due to dearth of economics while EUR marked no change against the greenback on Monday. The GBP kept on trading waters with BoE pessimism and recently released downbeat data-points and the Canadian Dollar hovered near 11 years low against US Dollar due to Crude weakness. Moving on, the Aussie, as the Australian Dollar is known as, printed negative daily closing with the profit booking as a plunge in Chinese Industrial profits while the Kiwi, the NZD, remained strong across the board due to year-end currency demand from companies and hedging interest to adjust for the greenback’s strength. Moreover, the Crude prices liquidated some of its recent gains as Iran repeatedly said it would support higher production after released from ban.
During the early Tuesday, when some of the closed markets, like UK and Canada are scheduled to open, currencies of both these nations, namely GBP and CAD, printed some gains; however, there aren’t any economic releases scheduled for publish during the day and may force them to rejoin their south trend at a later stage.
The USD is more likely to close the year with positive closing during the later days as it is the only nation having economics to publish in final week of 2015 while majority of the events are likely printing upbeat numbers and can help the greenback. Hence, it would be in the best interest of the market players to support a short-term buying on the USD, if at all they want to trade during these less-liquid markets while NZD and JPY are another set of currencies that could give profits if bought with short-term view.
With the US CB Consumer Sentiment surpassing the consensus & prior mark, the US Dollar again strengthened against majority of its counterparts while the Euro and GBP remained sluggish with no major economic releases to publish till the year-end. Moreover, the JPY also weakened during Tuesday as market players expected recent interest rate hike by the Fed, coupled with upbeat data-points, could continue fueling the USD during 2016. The NZD, AUD and the CAD were all on the downside as recent improvement in commodity prices were rolled back during late Monday and Tuesday, mainly by the Crude which trimmed its recent gains with a hike in APU Crude inventories favoring more of the supply-glut situations in the upcoming year. Though, the Gold prices improved with year-end profit booking and expectations that higher borrowing cost in US may help safe-haven demand of the yellow metal during next year.
Unlike Tuesday, the Wednesday have Spanish Flash CPI to be published while US Pending Home Sales becomes additional reason for the market players to remain a bit active during these dull days of trading. Further, UK Nationwide HPI rallied to the highest levels since April provided signals that the GBP might recover some of its recent losses after the UK markets open.
Even if there are releases scheduled from EU and US, those aren’t the major ones and considering the year-end celebration mood of the traders, it is more likely to witness less liquidity during the rest of the week. However, another upbeat US reading can help greenback to maintain its rise.
While we come to an end of 2015, it is time to look back towards the year off volatile moves. The USD is on its surge to register fourth consecutive yearly gains while the currencies, of JPY, AUD, CAD and NZD, together with the EUR, remained fragile and weakened heavily against the greenback due to their monetary policy divergence. Moreover, the Crude prices, which plunged heavily due to the supply glut, is more likely to witness further downside with gloomy Chinese outlook and a sign of heavy production output from OPEC while the Gold is on its third annual south-run as stronger USD curbed the precious metal’s demand.
On Wednesday, the US Dollar registered first daily downside of the week as US Pending Home Sales unexpectedly plunged to the lowest levels in two months to -0.9% against its forecast of +0.6% and upwardly revised prior gains of +0.4%. The Crude maintained its downside with US stockpile continue registering surplus numbers, pulling back the CAD and NZD while the AUD remained in a bit up-moved tone.
During Thursday, major global markets are closed and the same is expected to pump little volatility into the forex market as everybody would have been on celebration mood; though, US Jobless Claims and Chicago PMI might offer some details for those who wants to trade the USD.
As the 2015 will end today, with continued strength of the USD, chances of the same gains to be stretched to 2016, backed by gradual Fed rate hike expectations, can’t be denied; however, as it all depends upon the upcoming economics, it would be better to stay ready for the surprises as an improvement in European economy and a bounce in commodity basket may well affect the greenback strength.
Have a nice-day and a year-end to 2015 with best wishes for 2016…….
[B]Daily Fundamental Dose: 04 – January – 2016[/B]
Hello Traders,
A close of 2015 gave consecutively third positive closing to US Dollar Index as the Federal Reserve finally announced its much awaited interest rate hike during December while the rest of the global economies, including Euro, China, Japan, etc, kept favoring the loose monetary policy. The yen had a record fourth annual decline against the USD while the euro slumped a second year versus its US counterpart. However, last week remained a bit of dull for the forex market players with lesser economics to take care of and the scheduled US releases printed no good numbers. Moreover, tensions between and Iran and Saudi Arabia helped giving gains to the JPY, Crude and some of the commodity currencies like AUD, NZD and CAD.
During the early part of the current week, Chinese Caixin Manufacturing Index again printed a downbeat number and remained in contraction territory for the tenth consecutive time while the official manufacturing PMI, released during last week, also printed a below 50 number for firth time in a row.
The first full week of 2016 is full of economic events ranging from PMIs to the crucial US job numbers and can continue fueling the forex moves during the week after market players will return from the holiday mood. Hence, it would be in the best interest of the trader to closely observe all the economic numbers prior to taking any actions as chances of the year start with the negative USD can’t be avoided.
