Forex news from the European trading session - 9 January 2018
Economic data:
- US Dec NFIB small business optimism index 104.9 vs 107.8 expected
- Eurozone November unemployment rate 8.7% vs 8.7% expected
- Italy November unemployment rate 11.0% vs 11.0% expected
- Switzerland November retail sales y/y -0.2% vs -3.0% prior
- France Nov trade balance -EUR 5.7bn vs -EUR 4.7 bn expected
- Germany November trade balance +EUR 23.7bn vs +EUR 21.3 bn expected
- Germany November industrial production m/m +3.4% vs +1.8% expected
- Switzerland Dec unemployment rate 3.0% vs 3.0% expected
- Japan December consumer confidence index 44.7 vs 45.0 expected
Central bank/Government:
- EU's Schinas: Only natural to prepare for every Brexit eventuality
- China is said to have suspended counter-cyclical factor in daily CNY fix
- More on the BOJ FY 2018 GDP forecast possible revision earlier
- BOJ to consider raising FY 2018 GDP forecast at January meeting
- SNB Dec foreign currency reserves CHF 743.9bn vs CHF 738.2 bn prior
- North Korea to send high-level delegation to Winter Olympics
- SNB projects CHF 54bn in profit for FY 2017
- German deputy economy minister: Expects 2017 growth of 2.2%
Others:
- FX option expiries for the 10am NY cut - 9 Jan 2018
- Nikkei 225 closes up by 0.57% at 23,849.99
- PBOC's latest move cuts support for the Chinese yuan
- The spike in JPY today only a taste of what is to come when the BOJ removes stimulus
Markets:
- JPY leads on the day, CHF lags behind
- European equities are firmer on the day (again) with all major indices gaining
- Gold is down 0.38% to $1,315.50
- WTI crude is up by 0.39% to $61.97
- US 10-year yields is up by 1bps to 2.49%
- Bitcoin is down 1.1% to $14,770; Ethereum is up by 4.6% to $1,215
It was quite an interesting European trading session with good opportunities to be had all around. The underlying theme of the session was US dollar strength but the Japanese yen remains the leader on the major bloc following the BOJ announcement that it will "taper" its bond purchases.
USD/JPY fell to 112.50 in Asian trading on the announcement, but recovered in European trading up to 112.94 before surrendering gains again - the pair is now trading at 112.66. Look out, as there is a large option expiry in the pair at 113.00.
The NZD and CAD were mostly unchanged on the day against the USD, with the NZD boosted by AUD/NZD selling - limiting its losses on the day. Meanwhile, the AUD had a good start to the day on the back of stronger than expected building approvals data here. AUD/USD was trading near 0.7850 before the wave of dollar strength and AUD/NZD selling sent the aussie lower on the day.
The sterling, euro, and swissie had a similar trading pattern today as they all fell against the dollar and the yen on the day. It's mostly one-way traffic for the three currencies, but the GBP managed to recoup some losses against the USD after falling to a low of 1.3514 earlier. The pair is still staying above the support levels I mentioned here, which may help it stay afloat in the near-term. GBP/USD is now trading at 1.3540.
There was also action in the CNY, as the PBOC moved to suspend the "counter-cyclical factor" in the daily CNY fixing - which resulted in the CNY being sold late in Asian trading today.
Meanwhile, US Treasury yields are getting somewhat of a boost following the BOJ announcement - which helped to boost JGB yields as well. US 10-year yields touched above 2.50% for the first time since Trump's tax reform became official - and more importantly, the latest move higher had very little to do with tax reforms (which was the catalyst in sending yields higher both times in 2017).
