The Forex Week In Review
USD Janet Yellen will testify before Congress’s Joint Economic Committee. Heading into the testimony the USD Index has been strongly bid since President elect Trump was confirmed last week. With the market ramping up December rate hike odds to a near certainty their is certainly some scope for a pull back on any dovish comments from today’s speech. The release of her initial comments suggest the FED still sees room for expansion in the labour market. December seems to be on track according to the prepared remarks but she seems to be cautious regarding the outlook for 2017. In G10 FX GBP extended north to 1.2507 after big UK retail sales beat +7.4% y/y vs revised 4.2% previous and 5.3% expected
EUR Continued the decline on Wednesday and hit fresh 11-month lows under 1.0700, closing for an eighth consecutive day, as the greenback remained strong in the market. EUR attempted to recover ground after the release of US data that showed lower-than-expected reading in the PPI and in the industrial production report, the recovery was short-lived and it turned to the downside again after finding resistance at 1.0720 level.
GBP edged lower against the stronger USD, as markets shrugged off UK upbeat jobs data which showed UK jobless rate falling to the lowest level at 4.8% in 11 years. Instead, traders continued to focus on the risks surrounding Brexit. Adding to further pressure on the sterling was a lower-than-expected inflation data, which showed price growth still below half of the BoE’s 2% target
JPY Japan’s inflation will turn positive more quickly than projected by the Bank of Japan (BoJ) if the yen remains at its current level around 110 per dollar for a few months, according to a former central bank policymaker said. Markets believe the BoJ is encouraged by stock market gains and JPY declines after Donald Trump won the white house because this could help improve sentiment and give the economy a boost.
AUD Remained under pressure this week as the US dollar index hit its 14-year highs amid a 90 percent chance of a Fed rate hike in December. Australia only added merely 9.8k jobs in October, falling way shy of market forecast of a 20.3k job addition, while unemployment rate remained at 5.6 percent unchanged from previous month.
CAD Strengthened against the USD as domestic manufacturing sales rose for the fourth consecutive month. The increase in Canadian manufacturing sales topped economists’ expectations for a gain of 0.1%, but a dip in volumes advised slower overall economic growth heading into the fourth quarter.