Key Events This Week: Jan 11th – 15th
Sun: CNY – New Yuan Loans & Aggregate Financing
Mon: JPY – Trade Balance
Tue: GBP – GDP Estimate, Industrial Production & Manufacturing Production
Wed: USD – Fed Beige Book & Monthly Budget Statement
Thursday: AUD – Unemployment rate, EUR – German GDP, GBP – BOE Rate Decision
Friday: USD – Retail Sales, U. of Michigan Confidence
- USD Roughly unchanged over last week. FOMC minutes revealed that for some members, lift-off was a close call with significant concern expressed for the Fed’s inflation target. NFPs came in at a strong 292k with the unemployment rate unchanged at 5%, however, disappointingly low average weekly earnings weighs on USD bulls as a lack of momentum in wage growth further hampers the US inflation outlook. Retail sales key data focus this week.
- EUR The single currency was driven higher last week as the cascade in Equity markets saw the currency supported as carry trades and hedges were unwound. EZ CPI came in below expectations, which amidst a heightening of global growth concerns, has seen expectations building for further action by the ECB. German GDP key domestic data focus this week.
- GBP The UK currency extended recent weakness weighed upon by a variety of factors; Brexit concerns, economic weakness, and diluted rate hike expectations. The latest UK Services PMI data printed below expectations, further weighing on UK rate hike expectations, whilst Trade Balance data showed a wider deficit than expected though a slight narrowing from the previous figure. BOE rate decision key data focus this week with more Dovishness expected from the bank.
- JPY The Japanese Yen was a firm favourite over the week as global growth concerns stemming from further China data weakness and geopolitical tensions stemming from North Korea’s testing of a hydrogen bomb both weighed heavily on risk-sentiment fuelling strong demand for the safe-haven JPY. The safe-haven driven strength has however increased expectations that the BOJ will be forced to act to temper the moves.
- AUD The Australian Dollar suffered sharp losses last week in the wake of the dominant risk-off tone driven by Chinese data weakness and subsequent Yuan depreciation which weighed heavily on commodities and equities alike. Risk of further negative surprises from China keep’s the Aussie’s trading outlook pressured. Unemployment rate on Thursday is key domestic data focus.
- CAD The Canadian Dollar was driven lower last week as Oil picked up where they left off and began 2016 with a $6 slide. Despite the heavy weakness in Oil markets, price was able to stage a mild recovery as news that Saudi Arabia had attacked the Iranian embassy in Yemen caused supply concerns mid-week. The latest Canadian employment data showed that the Unemployment rate remained unchanged at 7.1% whilst the net-change in employment unexpectedly improved to 22.8k surpassing expectations of an 8k reading. An absence of key domestic data will leave CAD driven mostly by Oil & USD flows.