The Forex Week In Review
USD Global financial markets remained in risk-on mode, hanging on to hopes President-elect Trump’s “new” policies will uplift growth and inflation for the US economy. The three headline US equity markets hitting all time highs on the same day for the first time since 1999. Meanwhile, further positive vibes seen on the data front also continue to cement the way for the Fed to raise rates next month. Existing home sales rose 2.00% MOM to annualised rate of 5.60 million in October, marking its highest level since February 2007 as low borrowing costs continued to buoy demand for properties. Richmond Fed manufacturing index rebounded to positive territory for the first time in four months in November, affirming that the sector was gathering steam in the final quarter of the year.
EUR Euro zone’s consumer confidence index came in at -6.1 in November (October: -8.0), marking the best reading since December 2015. Separately, Japan’s Nationwide department sales fell 3.90% YOY in October (September: -5.00% YOY). Household spending remained sluggish despite the government’s huge stimulus package, underscoring the challenge to revive falling price pressure.
GBP Broke above the 1.25 barrier after assurances from the Prime Minister Theresa May that businesses would not be left teetering on a Brexit “cliff edge”. The currency also gained some uplift from the PM’s aim to keep UK corporation tax lower than its international rivals.
JPY President-elect Donald Trump announced yesterday that he intends to begin the process of withdrawing the US from the Trans-Pacific Partnership agreement as soon as he takes office on 20 January. His announcement has left Japan’s political leadership into confusion after Tokyo had strongly backed the deal.
AUD Edged higher as the upbeat global stock markets and commodity prices continued to support the overall market sentiment. US stocks closed higher, hitting new all-time highs, as investors continued to digest US President-elect Trump’s policy agenda.
CAD Canada’s annual inflation rate picked up to 1.5% in October, matching analysts’ expectations. But the core rate cooled slightly to 1.7% from 1.8%, hitting the lowest level since July 2014. CAD weakened slightly against the USD as higher oil prices were offset by broader gains for the USD and cooler domestic core inflation. Canadian retail sales rose 0.6% MoM in September, broadly in line with market expectations, according to data from Statistics Canada.