US Dollar weakened in North American holiday

The USD index started consolidation after it surged to the 88 mark in the European morning. The index later drew back to 87.50 after entering the US session on a US and Canadian holiday – Veterans Day. Even so, the trend has not been changed. US growth appears solid with the unemployment rate falling to 5.8%. The worrisome aspect though, is that there are still no signs of wage growth in the latest release, which may drag the inflation expectation. Some nevertheless overlooked this and are relieved to see Job Openings has quietly climbed to a 14 year high. That’s even higher than the peak pre-GFC period. A wage rise may be on the horizon for US workers.

The star pair on Tuesday was still the Dollar/Yen which reached a 7-year high of 116.09 in the European morning. News reports have implicated that the Japanese government may delay the hike of its consumption tax. The Fibo expansion suggests that the USDJPY is heading to an area slightly below 120 in the next few weeks.

The Aussie/Dollar once again stood upon 0.8680 this morning. However, the iron ore price dropped 6% in the recent two weeks as China’s officials temporarily closed down factories in Northern China. The aim is to greet global leaders attending APEC in Beijing with a blue sky. This can surely only add to the weak confidence of commodity markets and certainly cannot be good news for Australian exporters. The patience of the bears of Australian Dollar will be paid off.

The gold price bounced from $1147 level but still cannot recover its loss from Monday. The lower target is still in the area below $1147 where gold was consolidating last week.

The Asian stock markets – all except the Japanese – performed weakly yesterday. The Nikkei Stock Average surged 2.05% to 17124 inspired by the news of the delay of tax hike. The Shanghai Composite slid 0.16% to 2470. ASX 200 slid 0.12% to 5517. In European stock markets, the UK FTSE was up 0.04%, the German DAX lost 0.02% and the French CAC Index rose 0.35%. The US market kept refreshing the historical highs. The S&P 500 rose 0.07% to 2039. The Dow closed flat at 17606, while the Nasdaq Composite Index gained 0.19% to 4660.

On the data front, the Australian Wage Price Index at 11:30 AEDST may attract some local attention. UK Unemployment Rate will be released at 20:30 AEDST and BOE Inflation Report will be out an hour later.

Have a great trading day!

Anthony Wu

NB: Please note all references to rates above are approximate

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