Economic Data

  • New Zealand Building Consents for November + 1.2 % from + 10.7 % in October
  • Japans Core Machinery Orders in November – 11.3 % m/m (expectations + 0.2 %) from – 4.5% the previous month – 20.5 % y/y (expectations – 10.2 %)
  • Japans Corporate Goods Price Index for December + 0.1 % m/m (expectations flat) unchanged at + 0.1 % from the previous month – 3.9 % y/y (as expected) from – 4.9 % in November.
  • Australian unemployment rate at 5.5 % in December (expectations 5.8 %) from 5.7 % in November 35,200 jobs added to the Australian workforce in December much higher than expectations of 10,000

News

  • Federal Reserve’s William Dudley emphasizing that there is still a way to go in the economic recovery it is not as strong as it should be but the US economy is “in the middle of the beginnings”. Job gains will start to pick up and unemployment needs to come down before interest rates are raised. Credit still remains a problem due to the constraints in place from the banking system. He is confident that the Fed will be able to manage the balance sheet down very smoothly.
  • U.S. Treasury Secretary Tim Geithner has been asked to testify later this month in the hearing before the committee on oversight and government reform on the involvement of the Federal Reserve and other Federal agencies in dealings with American International Group.
  • Haruhiko Kuroda, President of the Asian Development Bank, said that the action taken by the Chinese Central Bank on reserve requirements was “quite appropriate”. He also spoke about exit strategies on stimulus packages saying that strategies must be country specific and tailored to the needs of individual countries taking into account inflation risks and debt levels. On Asia he does not see any significant inflationary pressures emerging and that he is “not so much concerned” at rising Chinese stock prices.

Currencies

  • The Australian Dollar was the main mover. Before the employment data Aussie was sitting comfortably in at 0.9225 – 0.9245 range getting paid up a smidge as the announcement grew near. An errant sharp dip to 0.9215 (see previous post) and then soared on the better than expected data to 0.9286. For the rest of the session it was locked between 0.9290 – 0.9300.
  • Euro basically traded 1.4520 – 1.4545 tried to break the resistance near 1.4550 but couldn’t get through. Euro waiting for Europe and the news from there.
  • Dollar Yen traded in a 91.30 – 91.45 band until investor buying taking out stop losses around the 91.50 level took the rate initially to 91.60 but since then new buying took it to it’s high at 91.77.
  • Initial interest to buy cable from its opening low of 1.6263 to around the 1.6270 level before the Aussie news when it followed the leader to it’s session high. The remainder of the session trading quietly between 1.6285 and 1.6303.

Ranges

EUR/USD 1.4497 – 1.4546 USD/JPY 91.27 – 91.77 GBP/USD 1.6263 – 1.6305 USD/CHF 1.0160 – 1.0190 USD/CAD 1.0295 – 1.0313 AUD/USD 0.9215(?) – 0.9315 NZD/USD 0.7385 – 0.7420

Rates as at 12.00 a.m.

EUR/USD 1.4532/35 USD/JPY 91.74/77 GBP/USD 1.6284/88 USD/CHF 1.0172/76 USD/CAD 1.0301/06 AUD/USD 0.9295/99 NZD/USD 0.7405/10 EUR/JPY 133.35/38 EUR/GBP 0.8922/26

Gold 1141.40/20

Dollar Index 76.910 (-0.08)

Oil 79.94