Key Events This Week: December 7th – 11th
Tue: EUR – EZ GDP
Wed: CNY – CPI, NZD – RBNZ Rate Decision
Thu: CNY – New Yuan Loans, AUD – Unemployment Rate, SNB – Sight Deposit Interest Rate & 3mth Libor, GBP – BOE Rate Decision & Asset Purchase Target
Fri: USD – Advance Retail Sales, U. of Michigan Confidence
- USD The US Dollar was sharply lower last week as initial strength was abandoned in the wake of the markets swift reaction to the ECB’s further measures announced on Thursday. Losses were stemmed on Friday however as the November NFP’s came in just above expectations with the Unemployment rate remaining at 5%.
- EUR The single currency was seen sharply higher in response to the ECB’s apparently disappointing course of action. The ECB cut rates in line with the expected 10bps reduction and although QE was extended (now set to run until at least March 2017) the stimulus program was not increased at this stage. Players who had been heavily short the Euro into the event, took profits on positions seeing a large spike in EUR.
- GBP Recent data flow for Sterling has been mixed; Net Consumer Credit, Manufacturing & Construction PMI data all missed before Services PMI data came in above expectations to stem losses on the week. Traders now await the BOE this week, with the BOE expected to continue their recent Dovish tone.
- JPY Despite slightly weaker Manufacturing PMI data the Japanese Yen was boosted by an impressive Q3 Capex release, growing at the fastest pace in July-September YoY for over 8 years, which suggests a possible upward revision to the recent weak Q3 GDP print.
- AUD The recent bullish momentum behind the Aussie continued again last week. The RBA held rates unchanged as expected and were optimistic in their economic outlook, noting the strong growth in jobs and overall economic resilience in the face of global headwinds. Governor Stevens’ optimism was tempered by the caveat that there remains scope for further easing if necessary, but currently momentum favours further upside in the Aussie. Traders now look ahead to domestic Unemployment data this week for further endorsement of the Australian labour force expansion.
- CAD The BOC kept rates on hold as expected in its December monetary policy meeting, however the accompanying statement struck a less Dovish tone than previous output, lending the Canadian Dollar some support mid week. Oil flows however kept CAD constrained ahead of Friday’s OPEC meeting, with the organization meeting to consider policies to combat the oversupply in the Oil market and stabilize prices.