Talking Points:
Most Major Currencies in Consolidation Mode in Overnight Trading Hours
Japanese Yen Narrowly Underperforms, Carry Funding Rotation Suspected
US Dollar May Rise as PPI Data Fuels Pre-FOMC QE “Taper” Speculation
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Most major currencies were little-changed against the US Dollar in overnight trade. The Japanese Yen continued to underperform in a move that seems to reflect continued rotation out of USD-funded carry trade positions into JPY-based alternatives. The cost of funding carry trades in Dollars rose to the highest in five years relative to doing so in Yen yesterday after a better-than-expected US Retail Sales report fueled speculation about an imminent “tapering” of Fed QE asset purchases.
Looking ahead, the economic calendar is somewhat lackluster through the end of the trading week. November’s US Producer Price Index data is in focus. Expectations call the year-on-year growth rate to accelerate to 0.8 percent, marking the fastest pace for wholesale inflation in three months. A pickup in pipeline price pressure may help reinforce the US economy’s readiness for a reduction of Fed stimulus efforts, broadly boosting the US Dollar as “taper” speculation heats up before next week’s FOMC meeting.
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Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
17:10
NZD
Business NZ PMI (NOV)
56.7
–
55.9
0:00
NZD
ANZ Consumer Confidence Index (DEC)
129.4
–
128.4
0:00
NZD
ANZ Consumer Confidence (MoM) (DEC)
0.8%
–
5.0%
2:00
NZD
Non Resident Bond Holdings (NOV)
65.1%
–
64.8%
4:30
JPY
Industrial Production (MoM) (OCT F)
1.0%
–
0.5%
4:30
JPY
Industrial Production (YoY) (OCT F)
5.4%
–
4.7%
4:30
JPY
Capacity Utilization (MoM) (OCT)
1.2%
–
1.2%
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
7:00
EUR
German Wholesale Price Index (MoM) (NOV)
-0.2% (A)
-1.0%
Low
7:00
EUR
German Wholesale Price Index (YoY) (NOV)
-2.2% (A)
-2.7%
Low
8:15
CHF
Producer & Import Prices (MoM) (NOV)
-0.1% (A)
-0.4%
Low
8:15
CHF
Producer & Import Prices (YoY) (NOV)
-0.4% (A)
-0.3%
Low
9:30
EUR
Italian General Government Debt (OCT)
–
2068.6B
Low
9:30
GBP
Construction Output s.a. (MoM) (OCT)
1.6%
-0.9%
Low
9:30
GBP
Construction Output s.a. (YoY) (OCT)
1.3%
5.8%
Low
10:00
EUR
Euro-Zone Employment (QoQ) (3Q)
–
-0.1%
Low
10:00
EUR
Euro-Zone Employment (YoY) (3Q)
–
-1.0%
Low
Critical Levels:
CCY
SUPP 3
SUPP 2
SUPP 1
Pivot Point
RES 1
RES 2
RES 3
EURUSD
1.3635
1.3700
1.3726
1.3765
1.3791
1.3830
1.3895
GBPUSD
1.6169
1.6266
1.6308
1.6363
1.6405
1.6460
1.6557
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx