Talking Points:
Asian FX Finds Divergent Paths in Conflicting Indications of Risk Appetite
Japanese Yen to Rise, US Dollar to Decline if Payrolls Data Underperforms
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Currency markets diverged in overnight trade. The sentiment-geared Australian and New Zealand Dollars traded alongside Asian stock exchanges, where shares followed Wall Street upward. The MSCI Asia Pacific regional benchmark equity index added 0.8 percent. Meanwhile, the Yen opted to follow more forward-looking risk appetite cues emanating from S&P 500 futures. Contracts on the US stocks yardstick declined, seemingly fueling safety-linked demand for the Japanese unit.
Looking ahead, traders are likely to dismiss a European calendar peppered with second-tier releases to focus on December’s US Employmentreport. The data set is due to show the economy added 240,000 jobs last month, marking a slowdown from the 321,000 increase posted in November. Leading survey data reinforces the probability of a downturn, pointing to significant slowdown in hiring growth in the services sector (which accounts for close to 80 percent of US employment).
Furthermore, US economic news-flow has deteriorated relative to expectations over recent weeks, suggesting analysts are overestimating the economy’s vigor and opening the door for a downside surprise. Such an outcome may push back Federal Reserve interest rate hike expectations, weighing on the US Dollar. It may likewise undermine risk appetite as traders fret that softening US performance will fall short of offsetting malaise in Europe and Asia, fueling further Yen gains.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
21:45
NZD
Building Permits (MoM) (NOV)
10.0%
–
9.8%
22:30
AUD
AiG Perf of Construction Index (DEC)
44.4
–
45.4
23:50
JPY
Official Reserve Assets ($) (DEC)
1260.5B
–
1269.1B
0:30
AUD
Retail Sales s.a. (MoM) (NOV)
0.1%
0.2%
0.4%
1:30
CNY
Producer Price Index (YoY) (DEC)
-3.3%
-3.1%
-2.7%
1:30
CNY
Consumer Price Index (YoY) (DEC)
1.5%
1.5%
1.4%
5:00
JPY
Coincident Index (NOV P)
108.9
–
109.9
5:00
JPY
Leading Index (NOV P)
103.8
–
104.5
European Session
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
6:45
CHF
Unemployment Rate (DEC)
3.4%
3.2%
Low
6:45
CHF
Unemployment Rate s.a. (DEC)
3.1%
3.1%
Low
7:00
EUR
German Industrial Production (MoM) (NOV)
0.3%
0.2%
Medium
7:00
EUR
German Industrial Production (YoY) (NOV)
-0.6%
0.8%
Medium
7:00
EUR
German Trade Balance (€) (NOV)
20.5B
22.1B
Medium
7:00
EUR
German Current Account (€) (NOV)
23.0B
23.1B
Low
7:00
EUR
German Exports s.a. (MoM) (NOV)
-1.5%
-0.5%
Low
7:00
EUR
German Imports s.a. (MoM) (NOV)
0.5%
-3.1%
Low
8:15
CHF
Consumer Price Index (YoY) (DEC)
-0.2%
-0.1%
Medium
8:15
CHF
Consumer Price Index (MoM) (DEC)
-0.4%
0.0%
Medium
8:15
CHF
CPI EU Harmonized (YoY) (DEC)
-0.1%
0.1%
Medium
8:15
CHF
CPI EU Harmonized (MoM) (DEC)
-0.3%
-0.3%
Medium
9:30
GBP
Trade Balance Non EU (£) (NOV)
-3475M
-3582M
Low
9:30
GBP
Total Trade Balance (£) (NOV)
-2000M
-2024M
Low
9:30
GBP
Visible Trade Balance (£) (NOV)
-9500M
-9620M
Low
9:30
GBP
Industrial Production (MoM) (NOV)
0.2%
-0.1%
Medium
9:30
GBP
Industrial Production (YoY) (NOV)
1.6%
1.1%
Medium
9:30
GBP
Manufacturing Production (MoM) (NOV)
0.3%
-0.7%
Medium
9:30
GBP
Manufacturing Production (YoY) (NOV)
2.3%
1.7%
Medium
9:30
GBP
Construction Output s.a. (YoY) (NOV)
6.7%
0.7%
Low
9:30
GBP
Construction Output s.a. (MoM) (NOV)
1.2%
-2.2%
Low
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.1610
1.1704
1.1749
1.1805
1.1798
1.1843
1.1892
GBPUSD
1.4915
1.4998
1.5044
1.5093
1.5081
1.5127
1.5164
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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