- 17.01.2022 12:30 pm
- 17.01.2022 12:00 pm
- 17.01.2022 11:30 am
JPY Outperforms, GBP, AUD Flat, Stocks Fall, Yields Ease
Summary: The Dollar’s sell-off that began this week slowed after US Producer Prices rose less than expected in December. However, the climb in December Wholesale Prices were the biggest on a 12-month basis since data went back to 2010. On the employment front, US Weekly Unemployment Claims rose to 230,000 from 207,000 the previous week, and higher than median forecasts at 199,000. The Dollar Index (USD/DXY), which measures the value of the Greenback against a basket of 6 major currencies settled at 94.80 from 94.90 yesterday and 95.60 Wednesday. After hitting an overnight and near 3-month high at 1.3749, Sterling (GBP/USD) slid to finish little changed at 1.3715 (1.3712 yesterday). Uncertainty over the future of current UK Prime Minister Boris Johnson due to his attendance to a work party despite lockdowns saw limited impact on the British currency. The UK remained well ahead of other major developed nations in its handling of Omicron given its successful rollout of booster jabs. Against the Japanese Yen, the Greenback (USD/JPY) slumped 0.53% to 114.07 (114.50 yesterday). The Euro (EUR/USD) edged up to 1.1460 from 1.1450. Earlier in the week, the shared currency jumped above the 1.1400 resistance threshold after trading below it since the start of 2022. The Australian Dollar (AUD/USD) settled at 0.7285, little changed from 0.7288 yesterday as speculative short bets continued their unwind. Overnight, AUD/USD traded to 0.7314, a fresh 2022 high. The USD/CAD pair finished at 1.2492 from 1.2500. Against the Asian and Emerging Market currencies, the US Dollar was mixed. USD/SGD (US Dollar-Singapore Dollar) closed flat at 1.3455. The USD/THB (Dollar-Thai Baht) pair dipped to 33.22 from 33.27 yesterday. USD/CNH (US Dollar-Offshore Chinese Yuan) closed at 6.3635 from 6.3615.
Global bond yields eased led by the US 10-year treasury note which settled at 1.70% from 1.73% yesterday and 1.76% at the start of the week. Other global bond rates were lower. Germany’s 10-year Bund yield settled at -0.09% (-0.06%). The DOW fell to 36,203 (36,342). The S&P 500 closed at 4,677 from 4,733.9. Australia’s ASX 200 settled 0.42% lower to 7,433 (7,447).
Data released yesterday saw US Headline PPI (m/m) dip to 0.2% against expectations of 0.4% and a previous 0.8%. US Yearly Headline PPI dipped to 9.7% from a previous 9.8%, and lower than forecasts at 9.8%. US Core PPI (m/m) matched forecasts, rising 0.5% but lower than a previous 0.9%. US Annual Core PPI climbed to 8.3%, beating median estimates at 8% and a previous 7.9%.
On the Lookout: Today’s economic calendar picks up with economic reports from Japan, Australia, China, the Eurozone, UK, Germany, and the US. Japan is first with its December PPI (m/m f/c 0.3% from 0.6%, y/y f/c 8.8% from 9% - ACY Finlogix). Australia follows with its November Home Loans (m/m f/c 0% from -4.1%). China releases its December Trade Balance (Surplus +USD 74.5 billion from a previous +USD 71.72 billion). Chinese December Exports (y/y f/c 20% from 22%), Chinese December Imports (f/c 26.3% from 31.7%). The UK starts off European data with its November Goods Trade Balance (m/m f/c -GBP 14.2 billion from -GBP 13.93 billion), UK November GDP (m/m f/c 0.4% from 0.1%; y/y f/c 7.5% from 4.6%), UK November Industrial Production (m/m f/c 0.2% from -0.6%; y/y f/c 0.5% from 1.4%), UK Manufacturing Production (y/y f/c -0.3% from 1.3%). France follows with its Final December Inflation Rate (m/m f/c 0.2% from 0.4%; y/y f/c 2.8% from 2.8%). Germany releases its Full Year GDP Growth (f/c 2.7% froom -4.6%). The Eurozone follows with its November Trade Balance (no f/c, previous was +EUR 3.6 billion). The US rounds up today’s data releases with its December Headline Retail Sales (m/m f/c 0% from 0.3%; y/y no f/c, previous was 18.2%), US December Core Retail Sales (m/m f/c 0.2% from 0.3%). US December Capacity Utilisation (f/c 77% from 76.8%), US December Manufacturing Production (m/m f/c 0.3% from 0.5%; y/y no f/c, previous was 4.6%), US December Industrial Production (m/m f/c 0.3% from 0.5%, y/y no f/c, previous was 5.3%). US Michigan Preliminary Consumer Sentiment (f/c 70 from previous 70.6) rounds up today’s busy economic data releases. All data forecasts are from ACY Finlogix. ECB President Lagarde and US FOMC Vice Chairman John Williams have speaking schedules at different events.
Trading Perspective: The Dollar’s sell-off that began this week was due mainly to position adjustments following what would be considered bullish news for the Greenback. It was a classic case of buy the rumour, sell the fact for the Greenback after the US Federal Reserve Chair Jerome Powell and some of his colleagues endorsed the outlook for multiple rate hikes in 2022. Earlier this week, the US CFTC Commission of Traders report saw speculative net long US Dollar bets near their largest in 2 years. Ahead of today’s plethora of economic data releases coming on a Friday, we can expect consolidation after a big move in FX this week. Trading conditions will remain choppy, which for many FX traders, is ideal. Get involved but stay nimble.
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