Talking Points:
Aussie Underperforms, Cyclone Christine a Possible Culprit
Japanese Yen Sold as Nikkei Gains, Sapping Haven Demand
US Dollar May Find Strength in Pending Home Sales Report
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The major currencies were little changed against the US Dollar in overnight trade. The Australian Dollar underperformed, falling as much as 0.3 percent on average against its leading counterparts. The selloff may reflect news that iron ore shipments from Northern Australia – a key hub for the country’s pivotal mining sector – will be temporarily halted as the area braces for the arrival of tropical Cyclone Christine.
A significant disruption in iron ore extraction and/or delivery in the aftermath of the storm’s passing may hinder economic growth and undermine RBA policy expectations. Markets are now pricing in no changes in the baseline lending rate over the coming 12 months, according to data from Credit Suisse.
Elsewhere, the Japanese Yen declined as local stocks advanced, sapping safe-haven demand. The benchmark Nikkei 225 index closed up 0.69 percent on the day. The inverse correlation between the Dow Jones FXCM Yen Index – a measure of the Japanese unit’s average value against its top peers – and the Nikkei is now 0.83 (on rolling 20-day studies).
Looking ahead, the spotlight is on November’s US Pending Home Sales report. Expectations point to 1 percent increase from October, marking the best performance in six months. US economic news-flow has increasingly outperformed relative to consensus forecasts over the past two months. Further evidence of strength may boost bets on continued “tapering” of Fed QE over the coming months, boosting the US Dollar.
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Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
0:01
GBP
Hometrack Housing Survey (YoY) (DEC)
4.4%
–
3.8%
0:01
GBP
Hometrack Housing Survey (MoM) (DEC)
0.5%
–
0.5%
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
9:00
EUR
Italian Business Confidence (DEC)
99.0
98.1
Low
10:00
EUR
Italian PPI (MoM) (NOV)
–
-1.3%
Low
10:00
EUR
Italian PPI (YoY) (NOV)
–
-2.7%
Low
Critical Levels:
CCY
SUPP 3
SUPP 2
SUPP 1
Pivot Point
RES 1
RES 2
RES 3
EURUSD
1.3367
1.3572
1.3660
1.3777
1.3865
1.3982
1.4187
GBPUSD
1.6143
1.6316
1.6400
1.6489
1.6573
1.6662
1.6835
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
