Solforex.com - Weekly/Daily Forex Market Analysis

[limyeeshin]

Edition 33｜December 7, 2015​

The euro retreated against the dollar after the disappointing monetary policy meeting by the European Central Bank last week. In early trading, slowdown in U.S. ISM manufacturing data weakened the dollar. The Federal Reserve Chair Janet Yellen strongly implied the rate hike execution in December however in regards to most recent U.S. economic indexes showing slow improvement, limited the euro weakening. The Eurozone decided to lower the deposit rate by 10bp at the ECB monetary policy meeting, lower than market’s expectation, let the EUR/USD hit 1.10. But the improved U.S. labor data on Friday limited the euro gaining further.

In the U.S., the Labor Department reported the U.S. economy added 211,000 jobs in November, above 200,000 jobs seen. The unemployment rate slightly ticked to 5% in November. The report supported the existing expectations toward rate hike in mid-December by Federal Reserve, strengthened the dollar. EUR/USD changed hand at 1.0880, down 0.56%. The pair yet closed the week with gains of 2.81%.

The Australian dollar fell in Asia on Monday with little regional data amid solid expectation of a Federal Reserve rate hike this month. In Australia, AI and HIA November construction index declined 1.4 points to 50.7 with new orders decreasing in all groups. AUD/USD traded at 0.7334, falling 0.10%.

Japanese yen also ticked down in Asia on Monday amid increased rate hike expectation by Federal Reserve. USD/JPY changed hands at 123.22, up 0.09%.

In the week ahead, investors will be looking ahead to central bank meetings in the U.K, Switzerland and New Zealand. The Bank of England Governor Mark Carney is to speak before the European Parliament Committee on Economic and Monetary Affairs on Monday, In Brussels.

Also, upcoming U.S. data on retail sales and inflation will be in focus for determination of Fed rate hike in mid-December.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, December 7
Japan is to release composite leading index.
Germany is to publish data on industrial production.
The Bank of Japan governor Haruhiko Kuroda is to speak at an event.
The Bank of England governor Mark Carney is to testify before the EPC meeting in Brussels.
In the U.S., the labor market conditions index and data on consumer sentiment are due.

Tuesday, December 8
Japan is to release data on current account and revised GDP growth.
Australia is to publish NAB report on business confidence.
China is to release data on its trade balance.
England is to publish data on manufacturing production and industrial production.
In the Eurozone, revised third quarter GDP growth is due.
Canada is to release data on building permits.

Wednesday, December 9
In Australia, Westpac is to report on consumer sentiment followed by data on home loans.
Japan is to publish data on core machinery orders.
China is to release data on both consumer and producer price inflation.
Germany is to release data on its trade balance.
China is to publish data on new loans and M2 money supply.

Thursday, December 10
New Zealand is to hold monetary policy meeting and announce its benchmark rate and give rate statements.
Japan is to release data on manufacturing private sector and producer price inflation.
Australia is to publish labor data on employment movements and unemployment rate.
England is to release data on trade balance followed by the monetary policy meeting by BOE and rate statements.
The U.S. is to release data on initial jobless claims and import and export prices.

Friday, December 11
Germany is to release data on consumer and wholesale price inflation.
The U.S. is to publish data on producer prices, retail sales and consumer sentiments.

On Saturday 12th, China is to publish data on fixed asset investment, industrial production and retail sales.

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[limyeeshin]

Thursday 10 December 2015

The dollar drops amid rising oil prices

The U.S. dollar dropped against other major currencies after the oil prices rebounded, recovering commodity linked currencies. Although the expectations for a U.S. rate hike this month still continues to support greenback with recent solid employment data fueling it further, increased outlook of U.S. economy will keep at a slow pace after the rate hike limited its support and pushed the dollar further down. USD/JPY fell 1.22% to 122.16, EUR/USD gained 1.15% to 1.0957 and GBP/USD gained 1.14% to 1.5166.

The kiwi rises despite rate cut from RBNZ

The Reserve Bank of New Zealand lowered its official cash rate by 25bp to 2.5% within the expectation. The New Zealand dollar gained on Thursday despite the rate cut as it was within investors expected scope. The RBNZ Governor Graeme Wheeler said that monetary policy needs to be accommodative to help ensure that future average inflation settles near the middle of the target band. He also added that the economy will achieve it at current rate settings although the bank will reduce rates if circumstances warrant. Investors found the market will remain still and therefore the kiwi rose 0.79% despite the RBNZ’s decision. NZD/USD increased 0.28% to 0.6737. AUD also rose by 0.33%, AUD/USD traded at 0.7228.

The euro remains subdued after the ECB meeting

The euro remained calm after last European Central Bank meeting shortened markets expectations for the scope of its easing program. On Tuesday, the 19 nation bloc in EU said the third quarter GDP increased by 0.3% amid rising inventories and higher household spending. The euro surged against the dollar on Wednesday hitting 1.10 for the first time in a month as investors prepared in advance for a rate hike by the Federal Reserve in next week. EUR/USD pair traded in a broad range of 1.0879 and 1.1042, settled at 1.1026, gaining 1.23% in the session.

Market Movements

Overall, the dollar itself fell 1.13%, EUR/USD gained 1.15%, USD/JPY fell 1.22% and GBP/USD gained 1.14%.
The commodity linked currencies were generally bullish, New Zealand dollar gained 0.79%, Australian dollar gained 0.33%, Norway crone gained 1.48%, Russian ruble gained 0.49%, and Brazilian real rose 1.20%.
Other emerging market currencies fell after the oil prices move, South African rand fell 2.36%, Turkish lira fell 0.21%, and Chinese yuan fell 0.17%.

(Mia Chung)
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[limyeeshin]

Edition 34｜December 14, 2015​

The dollar weakened broadly against other major currencies on Friday after steep decline in oil prices and Chinese yuan, brought concerns toward economy slowdown to emerging markets and commodity linked markets. The dollar was firm after the solid improved U.S. labor data in the beginning of the week, but the oil prices reached below 38$, lowest levels since 2009 and the dollar was weakened due to increased concerns for global market slowdown. The loss was yet limited ahead of FOMC meeting this week.

The funds that were moved to emerging markets after quantitative easing by Bank of Japan and ECB broke away and strengthened back the euro and yen. EUR/USD rose 0.48%, traded at 1.0992 with gains of 1.03% for the week. USD/JPY fell 1.81% for the week, traded at 120.99 in late trade on Friday. The dollar was also lower against the pound traded at 1.5217.

Chinese yuan fell to the lowest levels in four and half years on Friday, worsening investors’ concerns toward slow growth in the world’s second largest economy leading global market slowdown. Still most investors expect the Federal Reserve to raise interest rates for the first time in almost ten years at upcoming meeting on December 15th. Recent solid U.S. data supported the expectations that the economy is on a strong enough phase for the rate hike.

Japanese yen gained on Monday in Asia after the Tankan Sentiment index showed steady outlook of manufacturing. Large manufacturing firms in Japan showed +12 for the fourth quarter, while non-manufacturing large firms slightly moved to +18 from +19. Positive figures gave indications that major firms are in a better business conditions. USD/JPY traded at 120.86, down 0.10% after the data.

The Australian dollar slightly ticked up in early Asia on Monday despite steep drop of yuan as investors found hope in published data in China. The Aussie is highly linked to Chinese economy as China is the largest partner of trades in Australia. The weekend data showed industrial production in China rose 6.2% in November while retail sales rose 11.2% as well as rise in fixed investment by 10.2%. All data showed the industrial output is in growth footing with better than expected performances. AUD/USD rose 0.01% to 0.7189.

In the week ahead, investors will be focusing to Wednesday’s outcome of the final FOMC meeting of 2015. Upcoming data on U.S. inflation, manufacturing and industrial production will be also closely watched for better indication of rate decision ahead of the meeting.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, December 14
Japan is to release Tankan manufacturing and non-manufacturing index.
The U.K is to release housing price index.
Japan is to release data on industrial production.
The Eurozone is to release data on industrial production.

Tuesday, December 15
In Australia, The Reserve Bank of Australia is to release minutes on its recent monetary policy meeting followed by the data on house price inflation and auto sales.
The U.K. is to release data on consumer and producer price inflation as well as retail price index.
In the Eurozone, ZEW institute is to report on its economic sentiment.
Canada is to publish data on manufacturing sales.
In the U.S., data on consumer price inflation, New York state manufacturing activity and housing market index are due. Investors will be attentive to the data ahead of the FOMC meeting for better indication of rate decisions by Fed.

Wednesday, December 16
In the Eurozone, bundle of data will be published on PMI manufacturing and non-manufacturing index, consumer price inflation and trade balances.
The U.K. is to report on monthly employment.
In the U.S., data on building permits, new starts, industrial production and PMI manufacturing index are to be published.
Also, The FOMC meeting outcome will be announced followed by the Fed Chair Janet Yellen’s press conference.

Thursday, December 17
New Zealand is to release data on third quarter GDP growth.
Japan is to publish data on its trade balance.
In Germany, IFO institute is to report on the business climate.
The U.K. is to release data on retail sales.
The U.S. is to publish reports on initial jobless claims and Philadelphia’s manufacturing activity.

Friday, December 18
New Zealand is to publish data on its business confidence.
In Japan, The Bank of Japan is to publish minutes on its recent monetary policy meeting.
Canada is to release data on consumer prices and wholesale sales.
The U.S. is to publish data on PMI service sector.


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[limyeeshin]

Thursday 17 December 2015​

Federal Reserve approves rate hike
The U.S. dollar rose broadly against other major currencies after the Federal Reserve approved its first interest rate hike in almost ten years. The Federal Open Market Committee (FOMC) lifted its benchmark rate by 25 basis points to a range 0.25-0.50%. The dollar reached 98.5 point and turned lower after the announcement that further increasing pace will be considered gradual, hitting 97.7. But the Fed Chair Janet Yellen evaluated the U.S. economy is overall in satisfactory progress showing confidence in general, rebounded the dollar. The movements gap was mild with continued up and downs. EUR/USD fell mildly to 1.087, down 0.13% in late trade.

Yen shortens loss after improved trade balance
Japanese yen shortened its loss against the dollar after the trade balance data showing better than expected figures. In Japan, the trade balance for November was a deficit of ¥380.0 billion, less than the deficit of ¥446 billion expected. USD/JPY changed hands, down 0.18% to 122.44.

The kiwi falls despite improved third quarter GDP
The New Zealand dollar fell against the dollar in Asia Thursday despite the third quarter GDP growth was improved as the Federal reserve rate hike weighs higher with its first rate hike since 2006. New Zealand third quarter GDP rose 0.9% quarter on quarter, slightly better than 0.8% rise expected. NZD/USD traded at 0.6765, down 0.48%. The Aussie was eased with AUD/USD tracing 0.33% to 0.7206.

Market movements
Overall the U.S. dollar rose despite the dovish rate hike by Federal Reserve.
Major pairs:
EUR/USD -0.13%
USD/JPY +0.39%
GBP/USD -0.21%
Emerging markets and commodity linked currencies moved only mildly despite the rate hike. The oil price drop more affected commodity linked currencies to hold lower. Norway crone fell 1.04%, Russian ruble fell 0.90%, Brazilian real fell 0.24%, Australian dollar lowered 0.40% and New Zealand dollar fell 0.08%. Mexican peso and Turkish lira rose by 0.43% and 1.04% each and also South African rand slightly ticked by 0.05%.

(Mia Chung)
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[limyeeshin]

Edition 35｜December 21, 2015​

The U.S. dollar was broadly higher last week after the Federal Reserve decided to raise the initial interest rate first time in nine years with support from improved national economic indicators. The euro was slightly bullish at the beginning of the week after ECB president Draghi mentioning it can reach the inflation rate of 2% as expected showing confidence on the economy. But the U.S. consumer prices and New York state manufacturing were showing solid improvements ahead of FOMC meeting, turned the euro bearish.

Japanese yen boosted against the dollar on Friday after the monetary policy meeting by Bank of Japan with its latest easing measures fell short of market expectations. The Bank of Japan kept its main monetary easing target at ¥80 trillion, but decided to extend the government bonds maturity, setting up a ¥300 billion fund to buy exchange traded funds. USD/JPY hit 123.52 after the announcement before turning down 1.14% to 121.16 as investors found BoJ’s easing movement was not too significant.

The pound rose against the dollar on Friday, recovering from its eight-month loss as investors found the further rate hike will take on slower pace than expected. Fed Chair Janet Yellen announced after the rate hike decision that further rise will be gradual and dependent on upcoming data. GBP/USD hit 1.4950 before consolidating at 1.4934, up 0.21%.

Elsewhere, the oil price dropped to near seven year lows as continuing concerns on a global over-supply pressuring prices, leading global equity markets to tumble on Friday. Emerging markets and commodity linked currencies showed variation with steep dropping of oil prices.

The Australian dollar held weaker in Asia on Monday with no major data ahead with holiday thinned trading. AUD/USD traded at 0.7167, falling 0.27%. In New Zealand, the Westpac consumer sentiment rose to 110.7 for the fourth quarter from 106.00 in the third quarter. NZD/USD traded at 0.6730, ticking 0.06%.

In the week ahead, trading volumes are expected to be thinned and calm due to Christmas holiday market closure. The U.S. will release key reports on GDP, jobless claims and home sales.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, December 21
Bank of Japan is to publish its monthly report on the economy.
Germany is to release producer price inflation.

Tuesday, December 22
The U.K. is to release GfK consumer sentiment index and data on public sector borrowing.
Germany is to release import price index and GfK consumer sentiment index.
The U.S. is to release the final third quarter GDP and data on existing home sales.

Wednesday, December 23
Japan markets are closed.
New Zealand is to release data on its trade balance.
The U.K. is to publish data on its current account, GDP growth and business investments.
Canada is to release data on retail sales and economic activity.
The U.S. is to release bundle of data on durable goods order, personal income and expense, new home sales, consumer sentiments and oil inventories.

Thursday, December 24
Markets in Germany, Italia, Brazil, and Hong Kong are closed for Christmas Eve.
Bank of Japan is to release minutes on the latest monetary policy meeting.
The U.S. is to release data on initial jobless claims and weekly natural gas inventories.

Friday, December 25
Markets closed: United States, Germany, France, United Kingdom, Canada, Australia and New Zealand.
Japan is to release string of data on household spending, consumer price inflation, unemployment rate and housing starts.

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[limyeeshin]

Edition 36｜December 29, 2015

Yearly Review
The U.S. dollar showed up and downs with its influence from the rate hike issues. The euro was bearish with the European Central Bank extending quantitative easing program. In third quarter, China stock index was eased from its sudden drop but the devaluation in yuan brought emerging market currencies to depreciation. The rate hike was executed in the fourth quarter but the dollar’s gain was yet limited.

Overall major pairs, USD/JPY fell 0.62%, EUR/USD fell 9.32%, and GBP/USD fell 4.23%. Emerging market currencies were bearish, South African rand fell 31.09%, Mexican peso fell 16.92%, and Turkish lira fell 25.03%. As well as commodity linked currencies, with Russian ruble falling 20.94%, Brazilian real down 129.45%, New Zealand dollar down 12.33%, Norway crone down 16.40%, and Australian dollar fell 10.91%.

Weekly News
The euro rose against the dollar last week after slowed U.S. economic index released. While the dollar’s bullish trend let up after the rate hike execution, the oil price movements more affected the euro up and downs. While the trades were thinned due to global markets being closed for Christmas, the dollar slid lower against the euro and yen. The loss was limited as the market closure for holiday limiting significant moves to traders. EUR/USD closed the week at 1.0963, up 1% and USD/JPY fell 0.66%, closed the week at 120.287.

The mixed U.S. economic reports further lowered the dollar, failed to hint how soon the Federal Reserve will raise the rates next year. The U.S. economy grew 2.0% in the third quarter, slightly higher than 1.9% expected but revised from 2.1% of preliminary estimate. The U.S. core capital goods orders declined 0.4% last month, while shipments of core capital goods fell 0.5%. But personal spending rose and consumer sentiment improved to a five-month high in December. Also, the U.S. oil prices rallied for the fourth straight session on Thursday, gaining 10% for the week.

On Monday, the oil price dropped further as well as gold and silver and nonferrous metal showing decline, the safe asset preference was increased. But the commodity market falling spurred concerns toward emerging market and the carry trades moved to Eurozone and Japan slightly increasing the euro and yen.

The pound fell due to the oil price drop as the brent oil hitting lowest point in eleven years. But the U.K. and the British Commonwealth countries markets were shut for holiday, limited the loss of pound. The pound fell 0.27% against the dollar.

In the week ahead, trading volumes are expected to be remained thin and calm due to holiday period. The U.S. will release key reports on consumer confidence, pending home sales and jobless claims, guiding the strength of the economy and investors will look for further indication of next rate hike.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Tuesday, December 29
The U.S. is to release data on S&P Case schiller housing prices, consumer sentiments and State Street investor sentiments.

Wednesday, December 30
Spain is to release data on consumer prices.
The Eurozone is to release data on money supply.
The U.S. is to publish data on mortgage applications, pending home sales and weekly report on oil inventories.

Thursday, December 31
Markets in Germany, Japan and France are shut for the New Year’s Eve holiday.
The U.S. is to report on initial jobless claim and Chicago state PMI manufacturing.

Friday, January 1
Markets closed: United States, Europe, Japan, China, United Kingdom, Canada, Australia and New Zealand for New Year’s holiday.
China is to publish PMI data on manufacturing and non-manufacturing activity.

(Mia Chung)
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[limyeeshin]

Edition 37｜January 5, 2016​

The dollar rose against other major currencies with increased preference toward safe asset. The slowdown in Chia manufacturing increased the concerns on emerging markets economy and firmed the euro and yen. Especially, the steep drop in China stock market which invoked the circuit breaker for the first time by falling further than 7%, followed by stock drops in U.S. and Eurozone markets, expanded the concerns on emerging markets economy. Thus, the dollar with increased safe asset preference hit 99.2 and turned bullish. But the increase in yen and euro limited the dollar’s gain.

China Caixin PMI index fell to 48.2, below 49.0 seen by analysts. It indicates that any reading below 50, shrinkage in manufacturing sector. The disappointing figures in manufacturing transmitted to Chinese stocks, brought Shanghai Composite Index falling more than 7% that halted trading by the circuit breaker. Chinese sell-off brought global stock markets to bearish for the first trades of 2016. Germany Dax hit worst session in five years and the Dow Jones Industrial Average fell up to 450 points, suffering worst openings to a year.
Depreciation in stock markets and the yuan value hitting the lowest level since May 2011, brought fluctuation to forex market due to increased concerns on emerging markets. Also, the middle-east risk rose by Saudi Arabia announcing diplomatic cessation with Iran acted as an unfavorable factor in the market.

Elsewhere, Japanese yen changed hands with the dollar at 119.42 after Japan reported the monetary base at 29.5%, down from 32.5% in previous year. British pound slightly recovered from its loss broadly on Monday after the U.K. manufacturing sector data. Markit manufacturing fell to a three month low of 51.9, lower than 52.7 seen. GBP/USD traded at 1.4770 recovering from the overnight lows of 1.4692. The Australian dollar fell in Asia on Tuesday to 0.7187, down 0.04%.

Emerging markets currencies, especially high-exporting countries to China were generally bearish. South African rand fell 0.7%, Norway crone fell 0.44%, Brazilian real fell 1.72%, and Turkish lira fell 1.62%. Also commodity linked currencies broadly fell, Canadian dollar fell 0.8%, New Zealand dollar dropped 1.49%, and Australian dollar fell 1.44%. Chinese yuan also fell 0.96% and Russian ruble rose 0.38% distinctively.

In the week ahead, investors will be looking ahead to U.S. manufacturing and service activity and job report. Also, Tuesday’s report on Eurozone’s inflation will be in focus.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Tuesday, January 5
Germany is to release report on number of movements in employment.
Eurozone is to publish data on consumer price index.
The U.K. is to publish data on construction sector.
The U.S. is to release data on auto-sales.

Wednesday, January 6
China is to publish Caixin index on service sector.
The Eurozone is to release data on PMI service sector and producer prices.
The U.S. and Canada are to release its trade balance.
The U.S. is also to release bundle of data on ADP non-farm payroll, PMI service sector, factory orders, and ISM non-manufacturing index.
Federal Reserve is to release the recent FOMC meeting minutes at the end of the day.

Thursday, January 7
Australia is to release its trade balance and data on building approvals.
Germany is to publish data on factory orders and retail sales.
Eurozone is to report on the unemployment rates and retail sales.
The U.S. is to release data on initial jobless claims. Also, Chicago fed president Charles Evans is to speak at an event.

Friday, January 8
Australia is to release data on retail sales.
Japan is to publish the composite leading index.
Germany is to release data on industrial production and the trade balance.
Canada is to publish data on building permits, movements in employment and unemployment rate.
The U.S. is to report on employment and release data on wholesale inventory.

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[limyeeshin]

Thursday 7 January 2016​

The dollar drops after FOMC minute release

The U.S. dollar turned slightly bearish against other major currencies after the Federal Reserve released meeting minutes. The dollar increased its gaining gap after ADP non-farm payroll report showing great improvement in earlier trading. But Federal members showed concerns toward prices and said that cautious approach is required to minimize the economic shock. The general atmosphere of the recent meeting implied to investors that next rate hike pace will be in a slower pace. The dollar itself dropped 0.17% after the minute release.

Chinese yuan hit lowest level on Wednesday

Chinese yuan fell to its lowest level since 2010 opening of its offshore market extending its slide. Yuan has begun the year with 2.5% of decline in three days almost near the one-off onshore devaluation in August. It led to a global stock market selloff and another wave of competitive devaluation around Asia and other key economies are now on fear. The forecast shows further 7%-10% weakening of the yuan over the next 12 months. The offshore rates fell more than 1% against the dollar and hit the record low at 6.7315 on Wednesday.

Euro gains as emerging market currencies fall

The euro gained as emerging market currencies fell after declined economic data in China. The yuan hit its lowest level since 2010 opening which supported the euro’s gain. The euro gained 0.30% against the dollar at the late trading as the Federal Reserve reiterated its gradual plan toward monetary policy. EUR/USD settled at 1.0783 on the session.

Market movements

Currency traders reacted to the geopolitical and economic news in Asia and Middle-east. North Korea announced its successful hydrogen bomb testing on Wednesday and also the Chinese service sector fell to its lowest point in 17 months. The impact hit surrounding economies and the South Korean won fell to its four-month lows.
Also the oil price declined to the lowest level since 2009 as inventory for gasoline and refined oil sharply increased.

Overall, the EUR/USD gained +0.35%, USD/JPY fell-0.49 at 118.47, and GBP/USD fell -0.31%. Emerging market currencies were influenced from oil price drop and yuan depreciation. South African rand fell 1.32%, Mexican peso fell 0.92%, and Russian ruble fell 1.58%. Commodity linked currencies were also lower, New Zealand dollar fell 1.11%, Australian dollar fell 1.42%, Norway crone dropped 0.62%, and Canadian dollar fell 0.73%. Chinese yuan itself fell 0.83%, near to 6.7.

(Mia Chung)
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[limyeeshin]

Edition 38｜January 11, 2016​

The euro rose against the dollar despite solid U.S. employment report as concerns over slowing growth China continued. The yuan declined sharply on Wednesday, lower than the official onshore devaluation in August 2015. It led to a global stock market sell off and the Chinese stock trading was halted as it declined by 7% on Wednesday and acted the circuit breaker. The concerns are rising as the world’s second biggest economy is growing even slower than expected. The euro and yen rose against the dollar as concerns rose for emerging markets economy, EUR/USD rose 0.65% at 1.0929 and JPY/USD rose 2.38% at 117.44.

The U.S. employment report was improved in December with 292,000 jobs added. It increased from an upwardly revised 252,000 jobs in November and above 200,000 jobs expected. The unemployment rate also held steady low at 5%. The report supported expectation for the rate hike by Federal Reserve could be in a faster pace. The U.S. dollar itself ticked up slightly at the late trading by 0.16% but still lowered by 0.09% for the week.

The British pound lingered near five-year lows after disappointing U.K. trade balance data. The U.K. National Statistics office said the trade deficit narrowed down to £10.64 billion in November from £11.20 billion in previous month but it was still higher than £10.50 billion expected. The Brexit concerns also continued to remain and aggravated the pound’s loss, GBP/USD hit 1.4526, down 0.99%.

Japanese yen gained further on Monday in early Asia trading while markets in Japan are shut for national holiday. USD/JPY traded at 116.88, down 0.49%. On the other side, Australian dollar weakened further against the dollar by 0.25% at 0.6929, down 4.73% for the week.

Emerging market currencies and commodity linked currencies were lower with China economy concerns and oil price drop. South African rand fell 1.65%, Russian ruble fell 0.95%, New Zealand dollar fell 1.25%, and Australian dollar weakened by 0.86% for the day.

In the week ahead, investors will be looking ahead to economic reports in China, especially the trade balance on Wednesday. Also the U.S. data on retail sales, producer prices and consumer sentiments will indicate the further rate hike pace by Federal Reserve. Bank of England’s meeting minutes will also be in focus.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, January 11
Markets in Japan are closed for a national holiday.
In the Eurozone, Sentix investor sentiment index is to be released.
The U.S. is to publish labor market conditions index.

Tuesday, January 12
Japan is to release data on current account, bank loans and consumer sentiments.
China is to release data on new loans.
The U.K. is to publish data on industrial and manufacturing production.
In the U.S., the Federal Vice chair Stanley Fischer is to speak at an event in Paris. Also, the Redbook and Job openings and labor turnover survey are due.

Wednesday, January 13
China is to release its trade balance.
The Eurozone is to publish data on consumer prices and industrial production.
In the U.S., the data on weekly oil inventory and beige book are to be released.

Thursday, January 14
Japan is to release data on core machinery orders and producer price inflation.
Australia is to release data on number of employment movements and unemployment rate.
Bank of England is to publish its recent monetary policy meeting minutes.
Canada is to report on new house prices.
The U.S. is to publish data on initial jobless claims and import and export prices.

Friday, January 15
Australia is to release data on new home loans.
Eurozone is to publish trade balance. EU financial ministers will hold monetary policy meeting all day.
The U.S. is to round up the week with bundle of data on producer prices, retail sales, New York state manufacturing, industrial production, and consumer sentiments.


(Mia Chung)
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[limyeeshin]

Thursday 14 January 2016​

Dollar trims gains with shrunk manufacturing

The U.S. dollar trimmed its gains against other major currencies but remained supported as Chinese trade data shows improvement on Wednesday. The concerns on surrounding markets and emerging markets seemed to ease after the upbeat trade balance from China. The euro and yen were weakened after the data and the dollar rose responsively, however, the state fed presidents Eric Rosengren and Charles Evans mentioned that the rate hike pace will be slower than it was in 2004, trimmed the dollar’s gain. Later the day, the beigebook added that the national U.S. economy is improved, yet shrunk in manufacturing and there is no pressure for price inflation, turned the dollar bearish. The dollar itself lowered 0.06% after the beige book release.

Upbeat Chinese trade balance supports emerging currencies

Chinese trade balance on Wednesday showed upbeat movements that eased woes on emerging markets economy. The official figures showed that Chinese export rose 2.3% in December, rebounding from 3.7% decline in November. Exports were declined -1.4% on yearly basis in dollar terms, better than -8.0% drop expected. Imports also fell by 7.6% on yearly basis in dollar terms, better than 11.5% decline seen. The data eased the woes on surrounding economies, stabilized according currencies. At the same time, the central bank in China fixed the midpoint rate for the yuan at levels close to the fix of previous two days, easing concerns for rapid depreciation of yuan.

Major pairs

EUR/USD +0.23%
USD/JPY +0.03%
GBP/USD -0.08%
AUD/USD +0.11%
NZD/USD +0.15%

Market Movements

The emerging markets and commodity linked currencies were generally strengthened as upbeat Chinese trade data eased concerns to according markets. The oil price still pressured the currencies as it once dropped below 30$, first time since April 2004 but investors seemed to focus more on the Chinese trade data.
Overall, the South African rand rose 0.76%, Turkish lira rose 0.76%, Norway crone gained 0.69, Russian ruble was strengthened by 0.40%, and Brazilian real rose 0.34%. But the U.S. manufacturing shrinkage impacted Mexican peso, dropped by 0.27% and steep decline in Chinese stock weakened Australian dollar by 0.30% and New Zealand dollar by 0.16% in late trading.

(Mia Chung)
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