HotForex Forex News

11:08 Italy Industrial Output w.d.a (YoY) came in at 3.1%, below expectations (3.4%) in October


11:08 Italy Industrial Output s.a. (MoM) came in at 0.5%, below expectations (0.6%) in October


10:58 Source: China and UK to hold bilateral talks on December 15-16 - BBG

Bloomberg quoted an unnamed source familiar with the discussion, citing that China and the UK are expected to hold bilateral talks on December 15th & 16th.

Key Details:

To discuss potential plans to sell Panda bonds to the UK.

UK Treasury considering to issue Yuan-denominated sovereign bonds in China's onshore market.

Also to start a feasibility study on bond connect (similar to the one like China had with Hong Kong).


10:50 USD/CAD consolidates above mid-1.2800s, US CPI & FOMC awaited

   •  Remains capped below the 1.2900 handle. 
   •  A modest USD rebound helps offset bullish oil prices. 
   •  US CPI/FOMC decision could help determine near-term direction.

The USD/CAD pair struggled for a firm direction and seesawed between tepid gains/minor losses through the early European session.

Despite yesterday's sharp rebound from the 1.2800 neighborhood, led by upbeat US PPI print and sliding crude oil prices, the pair failed just ahead of the 1.2900 handle. 

The pair subsequently dropped back to mid-1.2800s important pivot-point on Wednesday and was being weighed down by an upset win for a Democrat candidate in a US Senate race and a goodish recovery in oil prices, which tends to benefit the commodity-linked Loonie. 

Meanwhile, a modest pickup in the greenback demand, with the key US Dollar Index recovering early lost ground, helped the pair to bounce off lows. The rebound, however, seemed lacking strong conviction as investors remained on the sidelines and look forward to the highly anticipated FOMC decision for a fresh directional impetus.

Heading into the key event risk, the release of US inflation figures and the US President Donald Trump's speech on the tax reform plan might infuse some volatility and help traders to grab some short-term opportunities.

Technical levels to watch

Immediate resistance is pegged near 1.2880 level and is closely followed by the 1.2900 handle, above which the pair seems all set to surpass the 1.2915-20 supply zone and head towards testing the very important 200-day SMA hurdle near mid-1.2900s.

On the flip side, sustained weakness back below mid-1.2800s could drag the pair back towards the 1.2815-10 support area, which if broken might negate any bullish bias and turn the pair vulnerable to head back towards testing 1.2760 support.
 


10:39 GBP/USD is consolidating - Commerzbank

According to Karen Jones, Analyst at Commerzbank, the current intraday Elliott wave counts for the GBP/USD pair imply that a small techincal rebound might be on the cards.

Key quotes:

"It has recently broken above the 2014-2017 downtrend and this has introduced scope to the 1.3658/71 September high and double Fibonacci retracement. Below 1.3320 should be enough to alleviate immediate upside pressure and allow for weakness back to the 1.3157 2016-2017 uptrend."

"A close below the 1.3157 uptrend will be viewed very negatively. The 1.3157 2014-17 uptrend represents the break down point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement."


10:14 EUR/USD: Remains on the defensive and probing 1.1712 - Commerzbank

Following its recent failure just ahead of the 1.1976/78.6% retracement level, the EUR/USD pair remains under pressure and our focus is on the 1.1712 - 21st November 2017 low, writes Karen Jones, Analyst at Commerzbank.

Key quotes:

“It stays directly offered below the 20 day ma at 1.1816. A close below 1.1712 the recent low should be enough to negate upside pressure and allow for slippage back to the 1.1553 7th November low.”

“The Fibonacci retracement at 1.1976 is regarded as the last defence for the 1.2092 September high.”

“It is possible that the move to 1.1553 as the end of an ‘a-b-c correction then the longer term risk is still on the topside.”


10:04 Gold hangs closer to 5-month lows, focus remains on FOMC

   •  Investors look past the latest US political development.
   •  Reviving USD demand prompts fresh selling. 
   •  US CPI/FOMC announcement holds the key.

Gold came under some renewed selling pressure on Wednesday and eroded majority of its previous session's recovery move from near 5-month lows. 

With investors looking past an upset win by a Democrat candidate in a deeply Republican state of Alabama, a modest pickup in the US Dollar demand, which remained supported by yesterday's upbeat US PPI print, prompted some fresh selling around dollar-denominated commodities - like Gold.

Investors focus would remain glued to the highly anticipated FOMC decision, due to be announced later during the NY trading session. Given that an eventual rate hike move is nearly fully priced in the markets, the accompanying rate statement and economic projections would help investors determine the next leg of directional move for the non-yielding yellow metal.

Heading into the key event risk, the latest US inflation figures would have implications over the central bank's monetary policy outlook for 2018 and eventually provide some short-term trading impetus later during the NA session.

Technical levels to watch

Weakness back below $1240 level might continue to find some support near the $1236-35 region, which if broken would turn the commodity vulnerable to extend the slide towards $1227 support area.

On the upside, $1245 level now seems to have emerged as immediate resistance, above which a bout of short-covering could lift the metal back towards an important supply zone near the $1252 region.
 


10:02 FOMC determined to deliver third rate hike - Rabobank

In view of Philip Marey, Senior US Strategist at Rabobank, although puzzled by this year’s decline in inflation when unemployment has dropped below its own estimate of the NAIRU, the FOMC seems determined to deliver its third rate hike of the year on December 13. However, by trying to squeeze in a third hike before the end of the year they may also reduce the probability of delivering three hikes next year, he further adds.

Key Quotes

“The Fed seems intent on hiking in December, despite admitting that it does not have a clue why inflation remains absent. In fact, it is clinging to the belief that wage and price pressures will strengthen as slack in the labor market continues to decline. Of course, delivering a third hike before the end of the year would fulfill the Fed’s promise contained in the dot plot for the first time since the start of the hiking cycle. In 2015 and 2016 the Fed had to backtrack on its promises, so now they seem intent on restoring the credibility of the dot plot.”

“Therefore, at the meeting on December 12-13 we expect the FOMC to change the target range for the federal funds rate to 1.25-1.50%, from 1.00-1.25%. Since this hike has been well telegraphed by the Fed, markets are likely to focus on the fresh set of projections, in particular the dot plot. Do the FOMC participants still expect to hike 3 times in 2018? The meeting will be concluded by Chair Yellen’s final post-meeting press conference. Since she will leave the Fed in early February, her words may not carry the weight that they had previously.”


10:01 South Africa Consumer Price Index (MoM) dipped from previous 0.3%to 0.1% in November


10:01 South Africa Consumer Price Index (YoY) dipped from previous 4.8%to 4.6% in November


09:47 UAE EnergyMin: Too early to speculate now about exit strategies for output cut pact now

The UAE Energy Minister Suhail al-Mazroui was on the wires last minutes, via Livesquawk, noting the following.

Too early to speculate about exit strategies for the global supply cut pact at this time.

Exiting cuts will be a collective discussion between OPEC, non-OPEC at the appropriate time.

At present, our focus remains on current supply cuts agreement, which runs to end of Dec 2018.


09:47 USD: Alabama elections a precursor to a fragile US political backdrop in 2018 - ING

US politics, the Fed and CPI data means the $ may be in for a bumpy ride today, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“In what could be seen as a precursor to US politics in 2018, President Trump and the Republicans were left somewhat red-faced when their candidate Roy Moore lost the Senate Alabama elections to Democrat Doug Jones. The initial focus for financial markets will be on the knock-on effects this has for a tax bill being passed through the Senate – where the Republicans now have a slender 51-49 majority. With the likes of Senators Rand Paul and Susan Collins still not fully on board with the current package, we still believe that there are major political hurdles to be cleared to get any tax bill over the line. Looking ahead, we wouldn't underestimate the broader political woes this may have for the US dollar in a mid-term election year; a more uncertain US political backdrop – coupled with better growth opportunities elsewhere – is partly why we think investors have stronger incentives to shy away from US assets in 2018.”

“This all makes today’s FOMC meeting – and Chair Yellen’s final press briefing – a relatively mundane affair. Beyond sticking to the status quo of counting on a dormant Phillips Curve to suddenly wake up, it will be interesting to gauge how much conviction Fed officials have over the transitory nature of low US inflation. We identify the 2018 median core PCE inflation estimate as a litmus test; after ticking down to 1.9% in Sep, any further move lower would suggest that the Fed are more worried about the persistence of low price pressures.”

“On this note – and ahead of the Fed meeting – we’ll get the Nov US CPI report; the headline print may be distorted by gasoline prices, meaning that core CPI is the one to watch. At 1.8% YoY, we are set to stay below the Fed’s target.”

“Bar any positive US CPI surprise today, we look for the USD to come under some pressure – not least as we expect the classic ‘buy the rumour, sell the fact’ type of reaction around the Fed hike. A sharper DXY retrace could see 93.30 tested.”


09:44 US CPI: Expect a monthly increase of 0.4% - Lloyds Bank

Annual ‘headline’ US CPI inflation slipped back to 2.0% in October reflecting a modestly lower oil price, but annual ‘core’ inflation picked up modestly to 1.8%, points out the research team at Lloyds Bank.

Key Quotes

“The sharp rise in the oil price during the month, along with higher food prices looks likely to have led to a big rise in the ‘headline’ reading for November. We expect a monthly increase of 0.4% taking the annual rate to 2.0%. ‘Core’ inflation should be more stable. We forecast it to hold steady at 1.8%. Nevertheless, as economic growth remains above trend and the amount of slack in the economy is diminishing we expect it to pick up next year.”


09:43 EUR/CHF: A close below 55-day ma needed to alleviate the upside bias - Commerzbank

In the view of Karen Jones, Analyst at Commerzbank, a daily closing below the 55-DMA could open floors towards the key support of 1.1606 in the EUR/CHF cross.

Key Quotes:

“EUR/CHF is at last starting to keel over, we will need to close below the 55-day ma to alleviate the immediate upside bias. We remain unable to rule out an extension to the resistance line currently at 1.1806. However, we continue to highlight the 13 count on the daily chart and we look for the market to now fail. Above 1.1806 we have very little until 1.20. Our attention is now on the uptrend at 1.1606. This is reinforced by the 55-day ma at 1.1600 and recent low at 1.1544.“


09:33 USD/JPY bounces off lows, back around mid-113.00s

   •  Traders look past the latest US political development.
   •  Initial signs of inflationary pressure lend support to the USD.
   •  US CPI/FOMC announce to provide a fresh directional impetus.

The USD/JPY pair managed to recover majority of its early lost ground and has rebounded around 30-pips from weekly lows touched earlier today.

The pair extended overnight retracement slide from 4-week tops and dropped to an intraday low level of 113.13 on news of a Democrat candidate's victory in a US Senate race in Alabama. The outcome was seen having potential negative implications for the US President Donald Trump's tax reforms and attracted some selling pressure around the US Dollar. 

Barring the initial reaction, the pair lacked any follow through weakness as the US Dollar remained underpinned by yesterday's stronger-than-expected US PPI print for November, which jumped to the highest level since January 2012. 

Moreover, investors also seemed to refrain from placing/carrying aggressive bets heading into today's big event risk - FOMC decision, and hence, a possible short-covering move could also be one of the factors behind the pair's modest rebound over the past hour or so.

In the meantime, the release of US CPI print, along with the US President Donald Trump’s speech on the tax reform plan could infuse some volatility and help traders grab some short-term trading opportunities.

Technical levels to watch

Sustained strength above mid-113.00s, leading to a subsequent move beyond 113.65-70 area, now seems to pave the way for an extension of the pair's upward trajectory towards reclaiming the 114.00 handle.

On the flip side, 113.20-15 area now seems to have emerged as immediate support, below which the pair is likely to accelerate the slide towards 112.80 horizontal level ahead of the 112.60-55 support.
 


09:31 EUR/GBP may move below 200-dma on nascent signs of UK wage growth - ING

EZ industrial production and 3Q employment data will likely play second fiddle today amid a busy US calendar, suggests Viraj Patel, Research Analyst at ING.

Key Quotes

“EUR/USD slid to 1.1720 yesterday after US PPI data positively surprised, though has partly recovered to 1.1750 on US politics; we expect the retrace to continue under broad USD weakness post-FOMC – and eye a move back towards the 1.1800 level (100-dma).”

“In the UK, the focus will be on the Oct jobs report – signs of wage inflation moving in the right direction would be positive for GBP, not least as it confirms a tight UK labour market and validates the BoE’s tightening bias. We would look for EUR/GBP to move back below the 200-dma level (0.8805) on any positive wage growth surprise.”


09:29 UK unemployment rate to nudge down to 4.2% - Lloyds Bank

Analysts at Lloyds Bank note that despite surveys of hiring intentions remaining firm, the level of UK employment fell in Q3 by 14k.

Key Quotes

“Still, courtesy of an overall decline in the size of the labour force, the unemployment rate also moved lower, declining by one-tenths from 4.4% in Q2 to 4.3%. Some recovery in job creation looks likely in the latest report and we forecast a rise of 25k in the three months to October. That should deliver a further nudge lower in the unemployment rate to 4.2%. More importantly, annual headline wage growth looks set to jump to 2.6% from 2.2% largely due to base effects.”


09:25 SEK: Positive CPI surprise may do little to whet Riksbanks hawkish appetite - ING

SEK continues to face conflicting forces – with bearish sentiment being offset by a turnaround in near-term economic data, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“Indeed, after 2 months of downside surprises, Swedish CPI came in above-consensus at 2.0% YoY yesterday – which triggered a sharp reversal in EUR/SEK towards 9.90. Yet, our economists believe that the positive CPI surprise will have little bearing on the Riksbank’s inherently dovish mindset next week (20 Dec); this means that it may still be a bit early for calling a EUR/SEK reversal – that’s a 1Q18 story for Petr Krpata (targeting 9.60).”


09:20 Brent: Q4 2017 price outlook raised to $62/bbl - Barclays

The Barclays Research Team came out with their latest report on Brent, raising its Q4 outlook for the commodity by $ 2 from the previous forecasts.

Key Points via Reuters:

“Raises Q4 2017 Brent price outlook to $62/bbl from $60/bbl, maintains 2018 price outlook of $55/bbl.

We attribute some of the recent strength in oil prices to temporary factors that are likely to reverse in 2018".

Depending on the Forties pipeline outage duration, inventories could draw even more quickly in Europe, keeping (Brent) prices elevated in the $60/bbl range.”


09:16 Fed widely expected to increase interest rates Lloyds Bank

The US Federal Reserve (Wed) will decide on policy today and is widely expected to increase interest rates for the third time this year, to 1.5%, according to analysts at Lloyds Bank.

Key Quotes

“It also seems likely to confirm its previously announced path for gradually running down the asset holdings built up as a result of QE. Of more interest will be potential signals for policy in 2018 and beyond. We anticipate the updated ‘dot plot’ will reaffirm policymakers’ expectations of three further rate increases next year.”

“The post-meeting press statement and Fed Chair Janet Yellen’s press conference will also provide some guidance on the 2018 outlook. Overall, we anticipate the Fed to reiterate that they expect economic conditions “will warrant gradual increases” in policy rates. Data wise, the key releases are CPI inflation (Wed) and retail sales (Thu), both of which are forecast to have been boosted by higher gasoline prices.”


09:13 EUR/USD fails again near 1.1760, US CPI & Fed eyed

  • DXY extends correction on the US politics
  • 5-DMA at 1.1761 tested.
  • Further upside likely ahead of the US CPI, Fed?

After a brief phase of consolidation in early Asia, the EUR/USD pair broke higher to regain the 5-DMA barrier of 1.1761, although failed to sustain at higher levels, now easing back towards the familiar region near the midpoint of 1.17 handle.

The renewed uptick in the spot after the US dollar came under renewed selling pressure on the back of the latest US political headlines. The headlines cited that a Trump’s candidate lost the Alabama US Senate race, which could make it difficult for Trump to pass the tax bill.

Moreover, a profit-taking slide in the US dollar cannot be ruled out ahead of the key risk events, the US CPI and FOMC decision that are likely to have a significant impact on the USD price-direction in the coming days.

However, the upside lacks follow-through, as the divergent monetary policy outlooks between both continents will continue to undermine the sentiment around the Euro. The Fed is on track to hike the interest rates by 25 bps later today. Further, upbeat US PPI data boosts hopes of stronger CPI figures due to be reported in the NA session.

Ahead of the US inflation report, the pair will take fresh cues from the Eurozone employment and industrial production data slated for release in the European session.

EUR/USD Preferred Strategy

Karen Jones, Analyst at Commerzbank, explains: “EUR/USD remains under pressure following its recent failure just ahead of the 1.1976/78.6% retracement and our focus is on the 1.1712 21st November 2017 low. It stays directly offered below the 20-day ma at 1.1816. A close below 1.1712 the recent low should be enough to negate upside pressure and allow for slippage back to the 1.1553 7th November low.”

 


09:13 NZ: Focus on Half-Year Fiscal and Economic Update - Westpac

Analysts at Westpac, note that the Pre-Election Economic and Fiscal Update (PREFU) in August projected growing surpluses and falling debt over the next few years for NZ economy.

Key Quotes

“The HYEFU will need to incorporate two significant changes.

  • The first is the new Labour-led Government, which has promised additional spending in areas such as health, education, regional development and infrastructure.
  • The second is that the Treasury is likely to revise down its very optimistic forecasts of economic growth, which means a lower expected tax take.”

“With the Government still aiming to reduce net debt to 20% of GDP, it may have to meet its election promises through spending cuts elsewhere or additional sources of revenue.”


09:09 UK: Expect a further drop in the unemployment rate to 4.2% - Danske Bank

Analysts at Danske Bank point out that in the UK, the labour market report for October is due to be released, where they expect a further drop in the unemployment rate to 4.2%.

Key Quotes

“It is likely to be accompanied by continued modest growth in average weekly earnings of 2.2% y/y, meaning that real wage growth will continue to be negative.”

“In the UK , discussions on the government's EU withdrawal bill, which repeals the European Communities Act 1972, continues today. The opposition and Conservative rebels want a meaningful vote in Parliament on the final Brexit deal and PM Theresa May might have to give some concessions here.”


09:01 Germany Wholesale Price Index (MoM) came in at 0.5%, above forecasts (0.3%) in November


09:01 Germany Consumer Price Index (YoY) meets forecasts (1.8%) in November


09:01 Germany Wholesale Price Index (YoY) came in at 3.3% below forecasts (3.4%) in November


09:01 Germany Consumer Price Index (MoM) meets expectations (0.3%) in November


09:01 Germany Harmonised Index of Consumer Prices (YoY) meets expectations (1.8%) in November


09:01 Germany Harmonised Index of Consumer Prices (MoM) in line with forecasts (0.3%) in November


08:57 NZD/USD eases from 5-week tops, still above 50-DMA

   •  Positive momentum extends for the fourth consecutive session.
   •  USD weighed down by the latest political development.
   •  Focus remains on the much-awaited FOMC decision. 

The NZD/USD pair trimmed some of its early gains to 5-week tops but has still managed to hold in positive territory for the fourth consecutive session. 

The pair extended its recent rebound from 0.6825-20 support area and moved past 50-day SMA hurdle for the first time since Oct. 19 amid a modest US Dollar retracement. With investors looking past yesterday's stronger-than-expected US PPI print, news that a Democrat candidate has come out victorious in a hard-fought Senate race in Alabama kept the USD bulls on defensive.

The bullish momentum now seemed losing some steam as investors refrained from placing fresh bets ahead of the highly anticipated FOMC monetary policy decision, due to be announced later during the NY trading session on Wednesday. 

The Fed is widely expected to raise interest rates for the third time this year but investors would keenly scrutinize the accompanying statement for clues over the central bank's outlook for 2018, which would eventually help determine the next leg of directional move for higher-yielding currencies - like the Kiwi.

   •  FOMC plans to keep raising interest rates – Westpac

Heading into the key event risk, the latest US CPI print, along with the US President Donald Trump’s speech on the tax reform plan at the Department of the Treasury, in Washington, would also be looked upon to grab some short-term momentum play.

Technical levels to watch

Immediate hurdle remains near the 0.6960-65 region, above which the pair is likely to accelerate the up-move towards the key 0.70 psychological mark en-route its next major resistance near the 0.7055-60 area.

On the flip side, 0.6930 level now seems to protect the immediate downside, which if broken could drag the pair back towards the 0.6900 handle ahead of 0.6880-75 horizontal support.
 


08:43 When are the UK Jobs and how could they affect GBP/USD?

UK Jobs report overview

The UK labor market report is expected to show that the number of people seeking jobless benefits increased by 3.2k in the three months to November, compared to an increase of 1.1k booked in the three months to Oct.

The unemployment rate is expected to drop to hit a fresh multi-decade low of 4.2% during the period. Average weekly earnings, including bonuses, in the three months to Oct are expected to arrive firmer at 2.5%, while ex-bonuses, the wages are seen unchanged at 2.2% in the reported month.

Deviation impact on GBP/USD

 Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 20 and 60 pips in deviations up to 2 to -4, although in some cases, if notable enough, a deviation can fuel movements of up to 85 pips.

How could affect GBP/USD?

A positive surprise in the claimant count combined with higher average earnings could lift Cable back above the 1.3350 barrier. On a disappointing result, we could see the GBP/USD pair stall its recovery mode and drop back to test 1.3300 mark.

Haresh Menghani, Analyst at FXStreet, notes, “Technically, the pair has been printing lower highs/lower lows since the beginning of this month and hence, a clear break through the 1.3300 handle would suggest an extension of the near-term downward trajectory towards 50-day SMA support near the 1.3250-45 region. A follow-through selling pressure has the potential to continue dragging the pair further towards a medium-term bullish trend support around 100-day SMA support, currently near the 1.3190 region.” 

“Meanwhile, on the upside, momentum beyond 1.3340-50 zone could assist the pair back towards 1.3380-85 horizontal resistance ahead of the 1.3400 handle. A convincing move beyond the mentioned hurdles would negate any near-term bearish bias and help the pair to resume with its prior bullish momentum”, Haresh adds.

Key notes

UK unemployment rate likely to fall to yet another multi-decade low of 4.2% - TDS

UK Employment Preview: Impact of unemployment rate falling to multi-decade low is limited in the UK

About UK jobs

The Claimant Change released by the Office for National Statistics (ONS) presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally, a high reading is seen as negative (or bearish) for the GBP, while a low reading is seen as positive (or bullish).


08:37 US: Retail sales volatile owing to weather Westpac

Analysts at Westpac point out that retail sales were heavily affected by the weather and particularly notable was the surge in auto sales in September as written-off vehicles were replaced.

Key Quotes

“In October, demand for new vehicles remained strong, but some of this transitory demand will fall away in November, resulting in a subdued gain for headline sales of 0.3%. Core retail sales are likely to print at a similar level.”  


08:34 UK: Employment looks set to have fallen by roughly 35,000 - ING

It's certainly fair to say the UK jobs market is going through a rough patch and the headline measure of employment looks set to have fallen by roughly 35,000 thousand (3M/3M average) in October, according to analysts at ING.

Key Quotes

“It's entirely plausible that this is just noise, but the latest services PMI also suggested that the rate of hiring has slowed.” 

“One explanation is that the sluggish growth we've seen this year is starting to take its toll  - in the same way, that a burst of economic strength at the end of 2016 buoyed the jobs market earlier in 2017.”

Wage growth: If the jobs market is indeed starting to turn, then this could have consequences for wage growth. There has been some renewed momentum in earnings over recent months, although part of that is down to the higher national living wage. The Bank of England expects a real pick-up next year following some positive signals from their agents. There are skill shortages reported in certain sectors, although the wider economic slowdown, slimmer margins (as import costs rise) and political uncertainty mean wage growth may not take off quite as much as the Bank is hoping. Expect average earnings growth (ex. bonuses) to stay at 2.2% on Wednesday.”


08:28 US: Nov CPI likely to print around 0.3% - Westpac

Analysts at Westpac note that August and September saw strong gains in the US CPI owing to the effect of hurricane season. Gains of 0.4% and 0.5% in these two months were subsequently followed by a 0.1% rise in October.

Key Quotes

“The November outcome is likely to be somewhere in the middle, around 0.3%, as energy again supports headline inflation. Throughout the period, core inflation has remained stable, averaging a little below 0.2% per month. This will remain the case in November.”


08:02 FX option expiries for Dec 13 NY cut

FX option expiries for Dec 13 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: 1.1650 (EUR 531m), 1.1675 (707m), 1.1700 (1.4bn), 1.1750 (990m), 1.1800-05 (1.1bn), 1.1825-30 (834m), 1.1845-50 (950m), 1.1870-75 (692m), 1.1890-00 (1.4bn)

- GBP/USD: 1.3300 (GBP 141m), 1.3350 (240m), 1.3400 (216m)

- USD/JPY: 111.00 (USD 915m), 112.00-12 (842m), 112.40-50 (1.7bn), 112.68-70 (421m), 113.00-05 (615m), 113.30 (270m), 113.45-50 (1.7bn), 114.00 (965m), 115.00 (1.4bn), 115.50 (520m)

- USD/CHF: 0.9900 (USD 120m), 1.0000 (256m)

- AUD/USD: 0.7530 (AUD 211m), 0.7600 (153m)

- USD/CAD: 1.2680-85 (USD 621m), 1.2810 (155m), 1.2860-61 (150m)

- EUR/GBP: 0.8675 (EUR 420m), 0.8775 (1.3bn), 0.8805-07 (580m)


07:54 Italys PM Gentiloni: Calls for tailor-made UK-EU trade deal FT

The FT reports comments from the Italian PM Paolo Gentiloni, as he calls for a ‘tailor-made’ UK-EU trade deal.

PM Gentiloni urged London to make the first move on the post-Brexit plan.


07:49 Forex Today: USD retreats on US politics, UK jobs Up next

Forex today witnessed the extension of the corrective move in the US dollar from three-week tops reached against its main competitors in the US last session, following upbeat US PPI data release. The renewed sell-off in the greenback was mainly driven by the reports that a Republican candidate lost the Alabama US Senate race, which could make it difficult for Trump to pass the tax bill.

The Antipodeans advanced in Asia on the back of weaker DXY and a broad-based recovery in the commodities’ space while the safe-haven Yen recovered ground across the board on negative Asian equities and the US political setback.

Main topics in Asia

RBA's Lowe: Australian's to hold bulk of money in bank deposits

RBA's Lowe is speaking at an event entitled, "An electronic Aussie" with an address to the 2017 Australian Payment Summit. 

Consumer confidence surprised to the upside - Westpac

"The Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November."

ADB raises 2017 growth forecast for developing Asia - Nikkei

In its latest Asian Development Outlook Supplement report published on Wednesday, the Asian Development Bank (ADB) raised its economic growth outlook for Asia in 2017.

Trump candidate loses Alabama US Senate race, tax bill now harder to pass

The news is crossing the wires via Reuters that Trump candidate Moore lost in hard-fought Alabama US Senate race. Democrat candidate Jones has come out victorious. 

US Pres Trump puts pressure on China to cut off oil exports to Pyongyang - FT

The Financial Times (FT) reports that the Trump administration is exerting pressure on China to cut off oil exports to North Korea, stepping up efforts to convince the North’s leader Kim Jong Un to abandon his nuclear and ballistic missile programmes.

OPEC's Barkindo - oil rebalancing on its way

Comments from OPEC Secretary General Mohammed Barkindo are crossing the wires via Bloomberg.

Key Focus ahead

After a quiet Asian session, in terms of the economic releases, there are a plenty of risk events lined for release as we head into early Europe. The German final CPI and WPI data will be reported ahead of the European open, followed by the Eurozone employment and industrial production data due on the cards in the European session. Meanwhile, the UK labor market report will hog the limelight today, especially after yesterday’s stronger CPI data and ahead of the BOE monetary policy decision due this Thursday.

From the US docket, all eyes will remain on the CPI numbers and EIA crude inventory report ahead of the closely-watched FOMC interest rates decision and economic projections due later in the American afternoon.

GBP/USD - Negative set up ahead of the UK jobs report

UK data released yesterday showed inflation rose to 6-year high in November.  Still, the GBP/USD pair dropped to the two-week low of 1.3303 levels.

EUR/USD: Range-play to extend ahead of US CPI, FOMC

The EUR/USD pair stalled its overnight recovery in Asia, now consolidating near mid-1.17s, awaiting fresh directional impetus from the upcoming US CPI numbers and outcome of the final Fed meeting due later on Wednesday. 

US: Expect a 0.402% m-o-m increase in headline CPI inflation - Nomura

Analysts at Nomura offer a brief preview on what to expect from today’s US CPI data release due on the cards at 1330 GMT.

FOMC to raise the federal funds rate by 25bp – HSBC

HSBC Analysts offered their thoughts on what the Federal Reserve (Fed) is likely to announce at its final monetary policy meeting of this year.

 


07:46 UK unemployment rate likely to fall to yet another multi-decade low of 4.2% - TDS

Analysts at TDS are looking for the UK’s unemployment rate to fall to yet another multi-decade low of 4.2% in October, in line with consensus, after it came quite close in November with a 4.254% reading.

Key Quotes

“We look for the pace of improvement in the unemployment rate to slow over the next year though, as firms may be more hesitant to hire into Brexit unless we get more certainty on what the outcome will be. For wages, we look for the headline figure to rise from 2.2% to 2.5% y/y for October (mkt 2.5%), although ex-bonus wages are likely to hold steady at 2.2% y/y (mkt 2.2%).”

Today we get the final reading of German CPI for November, which we expect to remain unrevised at 1.8% y/y, but will take a closer look at the details to see how much of the rebound came from core inflation after the big downside surprise in October.”

 


07:44 FOMC plans to keep raising interest rates Westpac

A rate hike at this week’s meeting is the expectation of all in the market, having been well telegraphed by the FOMC since the decision to begin balance sheet normalisation back in September, according to analysts at Westpac.

Key Quotes

“Justification for the decision can be found in continued above-trend GDP growth, led by the consumer, as well as a labour market that has well and truly achieved full employment. Wages growth continues to lag, but the FOMC remain expectant. Confidence and financial conditions are also very supportive for the economy, hence the downside risks of a rate hike are negligible.”

“Inflation on a PCE basis is expected to firm slowly to target over the coming two to three years. If this occurs and we see two additional hikes in 2018, then the Fed Funds rate will remain neutral to the economy, sustaining growth.”


07:37 Norges Bank to raise its policy rate forecasts again - TDS

Analysts at TDS are looking for the Norges Bank to raise its policy rate forecasts again in this week’s MPR, despite the continued downside surprise in the inflation data.

“The Norges Bank will have to tread carefully, since if it pulls forward its first rate hike to the beginning of 2019, as expected, then markets may focus more on the policy differential with the ECB and the fact that the Norges Bank could now be the first one to raise rates. This is a fairly substantial change from 6 months ago, when the Norges Bank wasn’t looking to start raising rates until 2020.”

FX Strategy: While the Norges Bank may pull its rate hike forecast forward, we do not think this may be enough to support the NOK as liquidity deteriorates into year-end. While we think the NOK is attractive from a longer-term perspective, momentum in EURNOK remains to the upside and seasonal risks loom large.”

Rates Strategy: We maintain a bias for wider 2y1y NOK vs EUR OIS spread which currently trades at133bps.”


07:35 Australia: Employment outlook remains robust - Westpac

Justin Smirk, Research Analyst at Westpac, suggests that Australia’s leading indicators continue to point to a robust labour market while the soft October print lowers the chance for a soft or negative November print.

Key Quotes

“October was a soft update which we suspect was due to sample volatility”

“It is true that the October rise in employment was softer than expected, +3.7k vs market expectations of an 18k rise, but this should be put into context that October was the 13th consecutive monthly rise in total employment. This is longest stretch of positive employment prints since the run of 15 months from May 1993. The next longest run was 14 consecutive months from August 1979. As such it is not surprising that there are expectations for a negative print sometime soon, even just from survey volatility.”

“However, we are not going to pick some random month for this to occur even more so given that October was a soft month for both employment and participation which may have been a signal that sample volatility was behind the softer number. For more information please see our October Labour Force Economic Bulletin.”

“Westpac’s Job’s Index is currently poiting to an annual pace of employment growth around 2.6%yr and it suggest that it can hold this pace well into Q2 2018. In the October Labour Force Survey total employment growth was running around 3.0%yr, a bit higher than the Jobs Indexis pointing to but not out of the bound of the normal volatility in this relationship.”

“In addition, the Westpac/Melbourne Institute Unemployment Expectations Index (remember rising unemployment expectations suggest that household are expecting a deterioration in labour market conditions) have fallen 8.2% in the year to December taking the trend to 8% below the 10 years average, a very strong signal that household are experiencing a robust labour market. The last time the index was stronger than this was the –12% print back in April 2011.”

“For these reasons we are not looking for any meaningful moderation in the pace of employment growth. Our above market forecast for a 25k rise in employment will see the annual pace of growth ease back a touch to 2.8% year and the three month average change drop a touch to +21.7k in November from +23.3k in October.”

Unemployment forecast to be flat but with upside risks

Turning to unemployment in the October survey the rate fell to 5.4%, a low point in the series going back to February 2013 but still above most estimates of full employment (around 5.0%). However, given the every soft employment print in the month the fall in unemployment was due to a decline in participation to 65.1% from 65.2% with a strong focus on male participation; down from 70.7% to 70.5%. The overall participation rate drop appears to be concentrated in Vic, down to 65.7% from 66.3%, back to near the level seen in February this year.”

“For November, given our strong employment forecast we are also expected a jump up in participation to 65.2%. On current population growth estimates this should generate a 32.4k rise in the labour force which, with rounding, will see the unemployment rate steady at 5.4%. However, it is possible that the rise in participation could be larger and thus it is possible that unemployment will rise in November even given a robust employment print.”


07:16 AUD unmoved by RBA speeches TDS

Analysts at TDS point out that there were two RBA speeches and as expected neither were meaningful for AUD or OIS.

Key Quotes

“Lowe's speech about an eAUD is of curiosity value while Kent's speech focussing on business finance isn’t relevant for Australia’s biggest firms (miners and banks issue paper or go to the equity market for finance).  Headlines focussed on Lowe being anti-bitcoin.  The actual quote is “When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions … So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment.”

“AUD: Consumer sentiment in Dec ends the year with a pop to 103.3, only the second time this year printing over 100.  The increases were across the board, but special shout out to family finances up +15% and 9% in recent months.”


07:10 Japans current economic expansion will last to 2020 or later Reuters poll

According to the results of the latest Reuters poll, nearly 80% of economists say that they are concerned about the damage to banks' business if ultra-loose Bank of Japan (BoJ) policy is retained for too long.

Separately, two-thirds of economists expect Japan’s current economic expansion will last to 2020 or later, while 30% of them expect it will last till 2nd half of 2019.

More Findings:

17/35 economists said recent BOJ comments about reversal rate would not influence monetary policy.

1/3 of economists believe talks about reversal rate suggests BOJ will refrain from additional easing.

Most economists expect the BOJ to start scaling back its stimulus in late 2018 or after.


07:01 Economists raise 2017 Singapore GDP growth forecast - RTRS

The latest survey by Monetary Authority of Singapore (MAS), as cited by Reuters, showed the following.

GDP growth in 2017 seen at 3.3% vs 2.5% previously.

Median 2018 GDP growth forecast 3.0% vs 2.5% previously.

Q4 GDP median growth forecast raised to 2.6% y/y from 1.8%.

Core inflation 2017 median view trimmed to 1.5% from 1.6%.

2018 core inflation forecast unchanged at 1.6%.

Economists upgraded their views on manufacturing and exports.

Manufacturing is expected to grow 10.6% in 2017, up from the previous median forecast of 6.6%.

Non-oil domestic exports were seen expanding 9.0%, up from 7.4% previously.

In November, the government also revised up its GDP growth forecast range for the whole of 2017 to 3.0 to 3.5%, from the previous projection of 2.0 to 3.0%.

The government expects the economy to grow 1.5 to 3.5% in 2018.

Economists estimated that the Singapore dollar will trade at S$1.340 per US dollar at the end of next year.


06:57 US monetary and fiscal policies are moving - BBH

In view of analysts at BBH, US monetary and fiscal policies are moving and while the Federal Reserve is widely expected to raise the Fed funds target range by 25 bp, for the third time this year, Congress is trying to reconcile the House and Senate tax bills. 

Key Quotes

Treasury Secretary Mnuchin released a one page statement that explained how the proposed tax cuts pay for themselves, a claim often heard by the proponents. Mnuchin clearly indicated that they don't.  He was explicit: only when the tax cuts are considered in conjunction with other actions, will the growth rate be lifted and where the revenues will offset the tax cuts.”

Mnuchin is referring to deregulation, infrastructure initiative, and welfare reform.  These other measures, especially the infrastructure and welfare reform have not even begun the legislative process.  This is in turn helps explain why today's special election in Alabama is so important.  The Republican majority in the Senate is two, and if the Alabama seat won by the Democrats, the majority is halved.  Given the broad views contained in the Republican Party, it is too narrow of a margin to be confident of the rest of the administration's agenda.  And that is ahead of next year's midterm election.”

Moreover, the Treasury's statement assumed 15% corporate tax rate, while both the House and Senate had a 20% rate, and the President seemed to suggest after both bills were passed, that he would a 22% rate.  The Treasury's report assumed a 35% top tax bracket for individuals, while the Senate version called for a 38.5% top bracket.   It also most seems as if the Treasury worked backwards from the growth rate which it projects to average 2.9% for the decade.”

The "conference committee" is doing it work is a cloud of secrecy, and the sticking points have not changed.  They include the corporate rate, the pass-through rate, international tax provisions, and whether and how much state and local taxes can be deducted from federal tax obligations, and if the estate tax should be abolished.  The bill then needs to be scored to ensure that it is within the Senate rules.  The House and Senate still need to vote on it before the President signs it into law.  Some of the compromises that allowed the bill to pass the Senate 51-49 may be at risk in the reconciliation process.”

The FOMC meets tomorrow and a Fed hike is as fully priced in as can be expected.  The effective Fed funds rate has been at 1.16% since the June hike.  It eases at the end a month and quarter.  Assuming a 25 bp rate hike, the January Fed funds futures contract should imply a 1.41% rate (1.16% plus 25 bp).  It is currently quoted at 1.405%.”

In the statement, the FOMC may upgrade growth and recognize the recent strength in the housing market.  It may find some confirmation in recent reports for its assessment that the easing of price pressures earlier this year were likely spurred by transitory factors.  The headline rate bottomed in May near 1.6% and was at 2.0% in October.  It is expected to have risen to 2.2% in November.  The core rate is expected to be steady at 1.8%, having been stuck at 1.7% beginning in May and running through September.”

The targeted core PCE rate bottomed in August at 1.305% and was at 1.447% in October.  The November report will be released on December 22 and is expected to have risen 0.1%, which may be enough to lift the year-over-year rate to 1.46%.”

It is well appreciated that the Federal Reserve is midst of dramatic change in personnel.  Tomorrow will be Yellen's last press conference as Fed Chair.  As soon as Powell is sworn in, she will step down.  That means that this is likely her last meeting.  The first meeting in 2018 is last day of January.   The only personnel change since the September forecasts is that Fischer has stepped down and Quarles has joined the Board of Governors.  In September, the forecasts suggested a median anticipation of three hikes in 2018, two in 2019 and one in 2020.”

Several investment houses are forecasting four hikes next year, and have largely dismissed arguments that financial conditions are going to be tightened more aggressively by the shrinking of the Fed's balance sheet.  We do not expect the dot plots for next year to change. Watch the relationship with the 2020 forecast and the median dot of the long-term forecast.  The long-term forecast, which, when adjusted by the Fed's inflation target, can be a proxy for expectation of the long-term equilibrium real rate (r*).  The median long-term dot implied 2.75% in September, while two years before, it stood at 3.5%.”

There is some risk that the long-term forecast is still in the process of adjusting lower, but we would not expect it to change now.  It may be more of a 2018 story.  Goodfriend's nomination will likely be confirmed before the March FOMC meeting, when forecasts will be updated.   While wary of the erosion of credibility of not achieving the inflation target, Goodfriend has also been critical of past Feds for waiting too long to hike, which latter requires playing catch-up to the detriment of the economy.”   

“Also, next year's rotation of regional presidents, sees two of the chief doves, Kashkari and Evans lose their votes.  Nearly by definition, the configuration of the FOMC (not forecasts) will be in a more hawkish direction.  Kashkari dissented against the March and June hikes, and will likely dissent from tomorrow's as well.    Speculation of who replaces Dudley at the NY Fed has begun.  Given the selection process and the recognized desire for continuity, we expect an experienced person from within the Fed to get the nod.”

The best policy mix for currency seems to be looser fiscal policy and tighter monetary policy.  The US policy mix will likely move in this direction if the tax changes take place.  The prospects for the tax changes may be increasingly incorporated into the views and forecasts of Fed officials.  That said, most economists appear skeptical of the boost to growth coming from the proposed tax changes, with some recognizing that part of whatever increase in aggregate demand that results will be met with imports, and blunted by a wider trade shortfall.  The increase in US energy exports and decrease in energy imports is being overwhelmed by a deterioration of the non-energy trade balance.”


06:55 Crypto Today: Bitcoin drops on central bankers caution, S. Korea tax news

Bitcoin, (BTC/USD) the world’s most dominant cryptocurrency, is down almost 2% near 16,300 levels on the Luxembourg-based Bitstamp exchange, having hit fresh record highs at $ 17,428 on Tuesday.

Bitcoin rallied in a bid to test the $ 20000 mark comes after surging transaction fees, margins and processing times on the newly launched CBOE bitcoin futures boosted the demand for the spot across all the major exchanges.

However, the bulls faced exhaustion in the Asian trades this Wednesday, after headlines hit the wires that the South Korean government is considering taxing capital gains from cryptocurrency trading.

Moreover, the latest comments from the RBA Governor Phillip Lowe, labeling Bitcoin a ‘speculative mania’ and attractive to those who want to make transactions in the black or illegal economy. His comments echoed the weekend’s remarks from the RBNZ acting-Governor Spencer, after he said, "It (Bitcoin) looks remarkably like a bubble forming to me." 

Meanwhile, its rivals Ethereum (ETH/USD) and Litecoin (LTC/USD) rallied 30% and 70% respectively a day. At the time of writing, ETH/USD drops -5.50% to trade at $ 598 levels, while Litecoin dives nearly 8% to $ 325.

Meanwhile, Bitcoin sits at the market capitalization of $ 279.50 billion, down from about $ 285 bn seen last Friday.The total market capitalization of the cryptocurrencies sits at $ 477 billion.


06:31 US Pres Trump: Republicans will have another shot at this seat in a very short period of time

The US President Trump is out on the wires now, via Twitter, responding to the latest news of an Alabama Senate Democratic win.

Key Quotes:

“Congratulations to Doug Jones on a hard-fought victory. The write-in votes played a very big factor, but a win is a win. The people of Alabama are great, and the Republicans will have another shot at this seat in a very short period of time. It never ends!”


06:28 NZ: Quiet month for the housing market - Westpac

Dominick Stephens, Research Analyst at Westpac, notes that it was another quiet month for the New Zealand housing market, with prices flat and sales still slow.

Key Quotes

“The housing market continued its run of recent improvement in November. REINZ data, seasonally adjusted by Westpac, registered a 4.1% lift in house sales in November, after a 3.4% lift in October. This takes house sales back to a level last seen in May, although sales are still 9% lower than a year ago. One important thing to note is that REINZ has changed its methodology. This will create a tendency for the number of sales to be understated at first, and then revised higher over time. For example, in October we reported that house sales had risen 1.3%, but that has now been revised to 3.4%. The implication is that house sales may have risen even more than 4.1% in November.” 

“Other indicators have also registered the recent recovery in the housing market. The number of houses available for sale on realestate.co.nz has lifted sharply, and the average time to sell fell.”

“House price behaviour can be divided into two broad regions. House prices in the North of New Zealand (Northland, Auckland, Waikato and Bay of Plenty) continued with their recent trend of recovery. In this part of the country, prices fell in early- to mid-2017 but have mostly been rising since August. In the remainder of New Zealand, monthly price changes were weaker. Wellington registered a 1% seasonally adjusted lift in prices, but many other Central and Southern regions declined in price. In this part of New Zealand, house prices rose very rapidly right through to early 2017, but markets have subsequently slowed sharply.” 

“This pickup in house sales, and the fact that prices are rising again in Northern New Zealand, is no surprise. We noted in the October edition of Home Truths that housing market conditions had been showing signs of improvement since August. With the election out of the way and mortgage rates trickling lower, we said then that we expected a few more months of housing market improvement. We now have the added possibility of a rush to beat restrictions on foreign purchases and tax changes (although house sales were down in Auckland, the most speculative market, suggesting that this is not yet a factor).”

“We expect housing market data to be similarly strong in December and possibly January. But over 2018 we expect New Zealand house prices to fall in response to rising mortgage rates and regulatory changes.” 

 


06:24 Australia: Healthy growth momentum - NAB

2017 was a year of divergence between the business sector and the household sector and the Australia’s GDP data confirmed healthy (though volatile) growth momentum in the first three quarters, mainly led by business and government investment, explains the research team at NAB.

Key Quotes

“Strong business conditions broadened across industries and states, enabled by strong profitability. Households meanwhile continued to restrain their spending amidst further weakness in wages and household income growth, despite strong employment, while housing construction now appears to have peaked in a trend sense. Net exports didn’t contribute as much as expected, partly because LNG has been slower to ramp up, partly due to weather disruptions, and partly due to offset from capital imports.”

The RBA’s focus through 2017 shifted towards addressing concerns about household balance sheets amidst rising housing prices, concerns which were ultimately addressed through tighter macro-prudential measures. Momentum in house prices is now slowing more clearly, particularly in Sydney and the apartment space. Meanwhile, strong employment outcomes enabled the central bank to maintain its belief that wages/inflation will eventually turn up, although the jury is still out about the strength of any upturn.”

In many ways, 2018 will be a continuation of 2017. A moderate improvement in economic growth to 2.9% in annual average terms is forecast (although momentum should slow as the year progresses), driving some further lowering of the unemployment rate to 5.2% by end-2018. Business and government investment will lead (with some offset from capital imports), dwelling construction will pull back a little but remain high and LNG exports will add to growth. Further strength in employment growth will help to narrow the gap between business and households spending, although our forecasts for wages suggest that any improvement in consumer spending will be glacial, particularly if wealth effects have an impact as house prices slow.”

Underlying inflation is forecast to pick up slowly to 2% by end-18, which together with early evidence of some pickup in wages growth should be enough to see the RBA commence tightening in the second half - we have 25bp hikes in August and November pencilled in. This would take the cash rate up to 2%, a level which is still considered stimulatory.”

Key developments to watch include: the transmission from employment to wages amidst forces such as globalisation and digital disruption; momentum in house prices and credit growth and how that impacts on monetary policy and/or macro-prudential policies; the path of the USD, commodity prices and the AUD (forecast to depreciate to USD0.72 by mid-year); domestic energy prices (to remain high and troubling for some sectors); and margin compression in retail.”  


06:19 Australia: Consumer Sentiment bounces back - Westpac

Australia’s Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November, notes Bill Evans, Research Analyst at Westpac.

Key Quotes

“This is a surprisingly strong result and confirms the lift we have seen in the Index over the last three months. The average reading for the Index in the December quarter is 5% above the average for the September quarter when we saw a disturbing slump in consumer spending. This result is supportive of the view that consumer confidence may have bottomed out during that September quarter.”

“In turn, growth in consumer spending is likely to have also bottomed out in the September quarter. However, with ongoing weak income growth; a low savings rate; and high debt levels we cannot be confident that consumers have the capacity to sharply lift spending despite higher confidence.”


06:14 Fed to raise rates three times in 2018 - WSJ survey

According to the latest survey conducted by the Wall Street Journal (WSJ) on the Fed’s interest rates outlook for the next year, a majority of the economists surveyed expect the Fed to hike rates three times in 2018.


06:13 USD/JPY drops on Jones victory, bearish doji reversal on the cards?

  • The USD is being offered following Jones' victory in Alabama.
  • USD/JPY could be in for a bearish doji reversal pattern.

The American dollar is losing weight across the board as Jones' victory in Alabama will make it more difficult for the Republicans to push forward with tax reform.

The USD/JPY pair fell to a three-day low of 113.13 and was last seen trading at 113.28 levels.

Currently, Republicans are 52.48 in Senate  Following the certification of victory on or after Dec. 26, Republicans will be 51-49 in Senate. So, Jones is unlikely to reveal his position on the tax reform before Dec. 26.

Thus, the GOP will have to ensure the tax package is approved before Dec. 26, post which the odds of it clearing the Senate test will drop. The decline in USD indicates the markets are factoring in a possible delay in tax reform approval.

Bearish doji reversal?

Yesterday's doji candle, if followed by a negative close today, would signal bearish doji reversal. The spot has dropped following Jones' victory, but could regain bid tone and move above 114.00 levels if the Fed hikes rates and sounds upbeat on the economy and interest rates.

However, odds are high that Yellen would keep guidance to a minimum and would regain from announcing major changes to the economic forecasts. In such a case, the USD could drop as the 25 bps rate is already priced-in.

USD/JPY Technical Levels

A bearish doji reversal would mean the rally from the November low of 110.84 has topped out. A break below 112.89 (50-day MA + 10-day MA) would open doors for 111.99 (Dec. 6 low) and 111.90 (38.2% Fib R of Sep. 8 low - Nov. 11 high). On the higher side, breach of resistance at 113.38 (5-day MA) could yield a re-test of 113.57 (session high) and 113.75 (previous day's doji candle high).  


05:56 Singapore Unemployment rate: 2.2% (3Q) vs 2.1%


05:46 Trump candidate loses Alabama US Senate race, tax bill now harder to pass

The news is crossing the wires via Reuters that Trump candidate Moore lost in hard-fought Alabama US Senate race. Democrat candidate Jones has come out victorious. 

It is being reported that a surprise victory for Democrats means the Republicans will find it hard to pass the tax reform. 


05:46 AUD/USD eyes 0.7600 on Aus data, weaker DXY, Fed in focus

  • DXY extends correction from 3-week tops.
  • Lifted on a big beat on Aus consumer confidence.
  • Rebound in gold and oil prices underpins.
  • US CPI, FOMC decision on tap.

The AUD/USD pair extends its rebound from half-yearly lows into a fourth day today, on the back of upbeat Aus macro news and broad-based USD correction.

AUD/USD: DXY drops on US politics

The Aussie resumed its upmove in Asia, benefiting from a solid boost seen in the Australian consumer confidence data.

Consumer confidence surprised to the upside - Westpac

"The Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November."

Moreover, a reversal staged by the US dollar from 3-week tops reached against its main competitors, in response to the renewed US political risks, also added to latest leg higher in the spot.

Reuters reported that the Alabama Senate race saw a Democratic win, the first Democratic Senate win in the state since 1992. The outcome poses a big risk for the Republicans, who are headed for a re-election in 2018.

The major now flirts with yesterday’s high of 0.7580 levels, with the AUD bulls looking to regain 0.76 handle amid a recovery seen in gold and oil prices. Oil prices recover on the back of a big US crude drawdown news, while the yellow metal rebounds from 5-month lows amid fresh North Korean headlines and weaker Treasury yields.

All eyes now remain on the US CPI report and FOMC rate decision for fresh trading opportunities ahead of the Australian employment data due out tomorrow.

AUD/USD Preferred Strategy

According to Jim Langlands at FX Charts, “The short-term indicators are still mixed, but trading from the short side continues to be the plan ahead of the FOMC Meeting (Wed) although it may be prudent to wait to sell it given the positive look of the 4 hour charts. Overall though, with the US$ looking generally underpinned elsewhere, I suspect that further upside for the Aud will be limited and selling into rallies is still preferred, but leave room for another squeeze towards 0.7580 and even to 0.7600. On the downside, support will arrive at 0.7520, below which there will be plenty of work to do at 0.7500 and then again at 0.7470/80, which will be strong, so taking some profit on shorts, if/when we get there, and looking to resell into a rally may be a more medium-term plan.”

 


05:29 OPEC s Barkindo - Oil inventory overhang had dropped below 140 million barrels

More comments from OPEC's Barkindo are crossing the wires via Bloomberg-

  • Oil inventory overhang has dropped below 140 million barrels. 
  • There is still a massive distortion in the market,
  • Fundamentals of oil have not been as strong as they are now.
  • Strong fundamentals and positive global growth are helping to drive prices higher. 

 

 

 


05:15 New Zealand Govt expects to pass a law banning overseas house buyers in 2018

Headlines crossed the wires, via Bloomberg, citing that New Zealand’s new government expects to pass a law banning overseas house buyers in 2018.


05:11 Higher margins set for CME s soon-to-launch Bitcoin futures BBG

The Chicago-based exchange owner, CME Group Inc., said today in a message to users that the margin requirements for bitcoin futures will be 47% next week when the contracts start trading, an increase from the previous initial amount was set at 35%.

CME said the margins were chosen due to volatility, a hallmark of cryptocurrency markets, Bloomberg reports.


05:08 Japan to keep record-low interest rates in FY2018 budget draft

Japan is set to keep the assumed interest rate at a record low of 1.1 percent as it compiles the budget for the next fiscal year starting in April. That way the government will keep its borrowing cost and the overall debt-servicing costs very low, sources told Reuters. 

 

 

 


05:02 South Korea Money Supply Growth dipped from previous 6.7%to 6% in October


05:00 UK s May faces parliamentary showdown with Brexit rebels

As per Reuters report, PM Theresa May's will undergo her stiffest parliamentary test yet today as she faces a showdown with rebels in her own party over the laws that will take Britain out of the European Union.

May’s government is trying to pass a bill through parliament that will repeal the 1972 legislation binding Britain to the EU and copy existing EU law into domestic law to ensure legal continuity following the ‘Exit Day’ on March 29, 2019.

 


04:54 South Korea to consider taxing capital gains from Bitcoin trading - RTRS

Reuters came out with the latest headlines on cryptocurrencies, citing that South Korea will consider taxing capital gains from cryptocurrency trading, as reported in the South Korean joint Govt statement.

Earlier today, headlines crossed the wires citing that the South Korean government held an emergency meeting on Bitcoin trading.

 


04:50 US Pres Trump puts pressure on China to cut off oil exports to Pyongyang - FT

The Financial Times (FT) reports that the Trump administration is exerting pressure on China to cut off oil exports to North Korea, stepping up efforts to convince the North’s leader Kim Jong Un to abandon his nuclear and ballistic missile programmes.

Rex Tillerson, US secretary of state, and HR McMaster, a national security adviser, said the Trump administration wanted China to go beyond existing UN sanctions by cutting off supplies of crude oil to North Korea.

Tillerson noted: “The president would like to see China cut the oil off. The last time the North Koreans came to the table, it was because China cut the oil off. Three days later the North Koreans were at the table talking.”


04:43 EUR/USD: Range-play to extend ahead of US CPI, FOMC

  • DXY corrects lower in Asia.
  • Eyes on US-German yield spread.
  • The US CPI, Fed decision - Key

The EUR/USD pair stalled its overnight recovery in Asia, now consolidating near mid-1.17s, awaiting fresh directional impetus from the upcoming US CPI numbers and outcome of the final Fed meeting due later on Wednesday. 

The corrective slide in the US dollar picked-up pace, prompting the EUR/USD pair to stage a solid comeback from a drop to three-week lows of 1.1718. The USD bulls moved past upbeat US PPI—led spike in the greenback and turned defensive on the FOMC day.

However, over the last hours, the bears have taken a breather, as the US politics is back in play, with the Alabama Senate voting underway while markets also look forward to the US President Trump’s speech on the tax reform plan at the Department of the Treasury, in Washington, due later today.

In the day ahead, the focus remains on the US-German yield differential ahead of the key inflation data alongside the divergent monetary policy outlooks between the Fed and ECB, as the Fed is widely expected to raise the rates by 25 bps today.

Despite a rate hike already priced-in by the markets, a ‘Sell the fact’ trading in the greenback cannot be ruled out, as the Fed’s economic projections and language of the statement hold the key for the next direction.

EUR/USD Preferred Strategy

According to Valeria Bednarik, Chief Analyst at FXStreet: “Technical readings in the 4 hours chart support additional declines ahead, as the price has settled below its 200 SMA, while early intraday advances were contained by a bearish 20 SMA, as technical indicators maintain their strong downward slopes within the negative territory. Below the mentioned relevant low, the pair has scope to extend its decline toward 1.1660, a strong static support level, while loses beyond this last, will be likely only on a strongly positive surprise from the Fed, later this Wednesday. Support levels: 1.1710 1.1690 1.1660. Resistance levels: 1.1750 1.1800 1.1835.”


04:40 GBP/USD - Negative set up ahead of the UK jobs report

  • Technicals, yield differential favors the downside.
  • Focus on UK jobs data and May's showdown with Brexit rebels.

UK data released yesterday showed inflation rose to 6-year high in November.  Still, the GBP/USD pair dropped to the two-week low of 1.3303 levels.

The daily chart shows a bearish 5-MA and a 10-MA cross. Also, the RSI has dipped below 50.00 levels (bearish territory). The spot failed to take out an ascending trend line (drawn from Nov. 14 low and Nov. 28 low) hurdle despite the uptick in inflation.

Further, the 10Y US-UK yield spread stands at 118 basis points (the highest since mid-August). The USD-favorable yield spread also favors downside in the pair. So, the pair is on the back foot while into the UK jobs data release.  

Focus on labor data

“The UK labor market is set to deliver another proof of strength in November. While the number of people claiming the unemployment benefits is set to increase by 3.4K in November, the unemployment rate is expected to fall further marking another multi-decade low of 4.2% in three months to October period”, said Mario Blascak, European Chief Analyst at FXStreet.

An upbeat jobs data and wage growth numbers could help the Pound revisit the 10-day MA level of 1.3420. On the other hand, a weaker-than-expected print could push cable down to 1.3245 (50-day MA). Also, PM May's parliamentary showdown with Brexit rebels could influence the pair.

GBP/USD Technical Levels

FXStreet Chief Analyst at Valeria Bednarik writes, "the technical picture is short-term bearish, with the price barely holding above quite a strong dynamic support, the 200 EMA in the 4 hours chart currently at 1.3310. The pair has remained below the 61.8% retracement of its latest bullish run at 1.3345 and below a bearish 20 SMA in the mentioned chart, while indicators hold within negative territory, but with the Momentum heading up and the RSI flat around 38, suggesting the pair may consolidate before the next directional move."

Support levels: 1.3300 1.3260 1.3220

Resistance levels: 1.3345 1.3380 1.3420


04:15 FOMC to raise the federal funds rate by 25bp HSBC

HSBC Analysts offered their thoughts on what the Federal Reserve (Fed) is likely to announce at its final monetary policy meeting of this year.

Key Quotes:

“We expect the FOMC to raise the federal funds rate by 25bp

Minneapolis Fed President Neel Kashkari is likely to dissent in favor of leaving rates unchanged, as he did in March and June. It is possible that Chicago Fed President Charles Evans could also vote against the rate hike; this would be his first dissent this year.

We do not expect any major surprises from the policy statement.

The statement will probably repeat that economic activity has been rising at a solid rate, while dropping earlier references to hurricane-related disruptions.

The FOMC will likely repeat that near-term risks appear roughly balanced and that inflation developments will be monitored closely.

Finally, the statement will likely reiterate the guidance that the Committee anticipates gradual increases in the federal funds rate.

We expect the FOMC's median projection for GDP growth to be lifted slightly for the next several years.

The projection for 2017 could be increased to 2.5%, up from 2.4% in September.

The 2018 projection could be raised to 2.3% from 2.1%,

And the 2019 projection could be raised to 2.1% from 2.0%.

We expect the FOMC's median projection for unemployment at the end of 2018 to be lowered slightly to 4.0% from 4.1%.

We expect the FOMC's median projection for policy rates at the end of 2018 to remain at 2.1%, implying three 25bp rate hikes over the course of next year.

This will be Ms Yellen's final post-meeting press conference as Fed Chair.

She is likely to strike a balanced tone with respect to the future course of policy, continuing to endorse the FOMC's message that gradual rate hikes are likely to be warranted in the coming year.“


04:06 OPEC s Barkindo - oil rebalancing on its way

Comments from OPEC Secretary General Mohammed Barkindo are crossing the wires via Bloomberg-

  • Oil rebalancing on its way. 
  • Strong China growth is positive. 
  • 2018 global oil demand seen up 1.5 million barrels per day.

04:02 ADB raises 2017 growth forecast for developing Asia - Nikkei

In its latest Asian Development Outlook Supplement report published on Wednesday, the Asian Development Bank (ADB) raised its economic growth outlook for Asia in 2017, while maintaining its projection for 5.8% growth for developing Asia in 2018.

Key Points:

“Expects economic growth in the region to slow in 2018

The ADB maintained its projection for 5.8% growth for developing Asia in 2018 while hiking its estimate for 2017 to 6.0% from 5.9%.

The ADB has kept its 2018 forecast for China, which accounts for roughly 60% of the regional economy, at 6.4%. Next year's outlook is slower than the upgraded 6.8% projection for 2017

East Asia growth is projected to slow to 5.8% next year, as most economies in the subregion moderate, including South Korea, Taiwan, and Hong Kong.

India is seen expanding by 7.3% next year, slightly lower than initially forecast

For Southeast Asia, the ADB boosted its growth projections to 5.2% in 2017 and 2018.

Growth projections for next year were revised upwards for the Philippines, Thailand, Vietnam, and Singapore.”

The report said, "Unexpectedly strong expansion in Central, East, and Southeast Asia more than offsets a downward adjustment to growth for South Asia. Lackluster investment growth in heavy industries with excess capacity will be only partly offset by strong investment in less capital-intensive emerging industries, consumer-oriented industries, and services." 


03:57 Dollar Index - 61.8% Fib hurdle intact, eyes Fed

  • The USD index holds below 61.8% Fib R of Nov. slide at 94.14.
  • Fed rate hike priced-in?

The Dollar Index (DXY) failed to hold above 94.14 (61.8% Fib R of Nov. slide) as the 10-year treasury yield retreated from the NY session high of 2.42 percent to 2.39 percent.

The 2-year yield shows the market has fully priced-in the 25 basis point rate hike. The 2-year yield, which mimics short-term interest rate/inflation expectations, has jumped close to 60 basis points since late September.

Hence, DXY may be finding it hard to break above the 61.8% Fib. Also, as Kathy Lien from BK Asset Management says, the dollar could fall if Yellen keeps guidance to a minimum and there are no major changes to the economic forecasts. Ahead of the Fed meeting, the Nov. CPI could yield minor moves in the greenback.

Dollar Index Technical Levels

The index was last seen trading around 94.02 levels. A move above 94.14 (61.8% Fib R) would shift attention to 94.52 (76.4% Fib R). A violation there would expose 95.15 (Nov. 6 high). On the other hand, a breakdown of support at 93.94 (5-day MA) could yield 93.58 (10-day MA) and 93.34 (100-day MA).

 


03:55 US: Expect a 0.402% m-o-m increase in headline CPI inflation - Nomura

Analysts at Nomura offer a brief preview on what to expect from today’s US CPI data release due on the cards at 1330 GMT.

Key Quotes:

“For November, core goods prices likely increased modestly, supported by another increase in used vehicle prices partly boosted by hurricane-related demand.

In addition, the recent stabilization of import prices likely contributed to a flattening out of other core goods prices after recent declines.

Core service prices likely increased steadily, albeit at a slightly slower pace than October.

A solid increase in rent inflation combined with a modest uptick in medical care prices likely contributed to a moderate increase in core service prices.

For noncore components, food prices likely increased slightly during the month, supported by a trend-like increase in food away from home prices and we expect a moderate increase in food at home prices, the other subcomponent of food prices.

We expect that CPI's energy prices overall likely rebounded during November, primarily driven by a surge in retail gasoline prices. Altogether, we expect a 0.402% m-o-m increase in headline CPI inflation, corresponding to a 2.2% rate on 12-month basis. Our forecast for CPI NSA is 246.716.“


03:47 US Sec of State Tillerson to N. Korea: US ready to talk without pre-conditions - Reuters

The US Secretary of State Rex Tillerson said in a speech to Washington’s Atlantic Council think tank late-Tuesday, the US is ready to begin direct talks with North Korea without pre-conditions, Reuters reports.

Tillerson said, “Let’s just meet.”

While reiterating Washington’s position that it cannot accept a nuclear-armed North Korea, Tillerson said the United States was “ready to talk anytime they’re ready to talk.”

But he insisted there would have to be a “period of quiet” without nuclear and missile tests to have productive discussions.

“We can talk about the weather if you want. We can talk about whether it’s going to be a square table or a roundtable,” Tillerson said.

“Then we can begin to lay out a map, a road map, of what we might be willing to work towards,” Tillerson said.


03:16 PBOC sets the Yuan reference rate at 6.6251

The People's Bank of China (PBOC) sets the Yuan reference rate at 6.6251 vs. previous day's fix of 6.6162.


02:54 US EIA cuts 2018 world oil demand growth forecast - Reuters

The US Energy Information Administration (EIA) trimmed it's 2018 world oil demand growth forecast by 40,000 barrels per day to 1.62 million barrels per day (bpd). In its monthly forecast, the agency raised the oil demand growth estimate for 2017 by 80,000 bpd to 1.39 million bpd.

  • EIA: 2017 U.S. crude oil production to rise by 380,000 bpd (vs 370,000 bpd gain previously)

02:44 UN Official Feltman - N.Korea agrees it is important to avoid war

Comments from UN political affairs chief Feltman crossing the wires via Reuters-

  • N.Korea agrees it is important to avoid war. 
  • We have left the door open for negotiations. 
  • N.Korea did not offer any type of commitment to talks. 

02:43 USD/CNY fix projection: 6.6288 - Nomura

Analysts at Nomura offered their model USD/CNY fix projection for today.

Key Quotes:

"Our model1 projects the fix to be 126 pips higher than the previous fix (6.6288 from 6.6162) and 76 pips higher than the previous official spot USD/CNY close of 6.6212. The basket implied change is 90 pips higher than the previous official spot USD/CNY close (6.6302 from 6.6212)."


02:40 USD/JPY: sitting above a robust 4-hr 10 SMA at 113.49

  • USD/JPY awaits FOMC and CPI data.
  • USD/JPY perched in consolidation at the high-end of the 113 handle. 

USD/JPY has been consolidating the bid and recovery from 27th Nov lows down at 110.84 having met a high of 113.75 in overnight trade. In Tokyo, USD/JPY was trading at 113.51, up 0.01% on the Asian day, having posted a daily high at 113.59 and low at 113.49.

FOMC meeting preview: big noise, little substance?

Overnight relative action

US rates, in the ten years up to around 2bps to 2.41% and in the middle of the range of between 2.37 - 2.42%. Wall Street higher as well with the DJIA printing a new record on the back of financials. The DXY was closing at the higher end of the range for Tuesday, between 93.7590 - 94.2190, ending at 94.068 for the day, +0.22%. However, the yen was picking up a safe haven bid with Wall Street looking toppy with new records set albeit lacking conviction, trading vs the greenback between 113.37 the low and 13.73, handing over to early Asia at 113.50.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the price is well above its 100 and 200 SMAs, both lacking directional strength. "The Momentum indicator hovers around its mid-line and the RSI consolidates near overbought readings, rather reflecting this week's range than suggesting exhaustion upward," Valeria added.


02:37 AUD/JPY - 200-day MA is a tough nut to crack

  • 200-day MA is capping the upside for the second day.
  • Big beat on Aussie consumer confidence isn't helping the AUD either.

AUD/JPY is trading on the front foot, although the bid tone is once again not strong enough to topple the 200-day MA of 85.85 levels.

Yesterday's move above the moving average was short-lived as well. Also, it worked as a strong resistance on Dec. 4 and Dec. 5.

Earlier today, the Westpac consumer confidence data printed at 3.6% vs. -1.7% previous. Still, the moving average resistance holds. As of writing, the pair is trading at 85.84 levels. Ahead in the day, the 200-day MA hurdle could fall if the equities remain well bid. Further, the Yen may drop if the US CPI betters estimates.

AUD/JPY Technical Levels

A close above 85.85 (200-day MA) would open doors for a rally to 86.69 (Oct. 31 low) and 87.12 (100-day MA). On the other hand, a breach of support at 85.36 (10-day MA) could yield 85.00 (zero levels). A violation there would expose 84.67 (Dec. 7 low).



 


01:56 Consumer confidence surprised to the upside - Westpac

Analysts at Westpac explained that the consumer confidence was a surprisingly strong result and confirms the lift we have seen in the Index over the last three months. 

Key Quotes:

"The Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November."

"The average reading for the Index in the December quarter is 5% above the average for the September quarter when we saw a disturbing slump in consumer spending. 

This result is supportive of the view that consumer confidence may have bottomed out during that September quarter."


01:52 AUD/USD: bid on big beat consumer confidence, awaiting FOMC/CPI/Aussie jobs

  • AUD/USD about to go off with a number of key data releases?
  • AUD/USD: up for another session overnight, but to consolidate ahead of FOCM?

AUD/USD was a fade from the high of 0.7580, ending at 0.7559 in NY from a low of 0.7519. AUD/USD is trading at 0.7559, down -0.03% on the day, having posted a daily high at 0.7564 and low at 0.7553.

In the absence of much else, the focus was on the recently released Westpac consumer confidence data that was a big beat in early Asia today compared to that of prior, arriving at 3.6% vs -1.7% previous, however, not moving the price more than a few pips bid.

Commodities and data events 

Elsewhere, the commodity sector overnight had gold lower, copper/iron ore in consolidation and WTI taking a hit on the back of EIA cutting it's 2018 global demand forecast while the DXY was better bid for the majority of the NY shift ahead of tonights FOMC announcements. Also on the cards are US CPI.

"We expect core CPI in November to increase 0.2% (0.174%) m-o-m, a slight deceleration from October’s 0.225%, but keeping the y-o-y rate unchanged at 1.8% (1.765%)," analysts at Nomura explained who also the FOMC to raise targets for short-term interest rates for the third time this year." Then, the markets will look to Thursday's employment data from Australia for the final showdown for the pair. 

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the 4 hours chart shows that, despite the latest intraday decline, the risk of a downward extension remains limited, as the price holds above a modestly bullish 20 SMA, while technical indicators have entered a consolidative phase within a positive territory. "The 0.7530 region is the immediate support, with a break below it probably resulting in the pair resuming its bearish trend."   


01:51 Japan Machinery Orders (MoM) came in at 5%, above expectations (3%) in October


01:50 Japan Machinery Orders (YoY) above forecasts (-2.8%) in October: Actual (2.3%)


01:32 Australia Westpac Consumer Confidence increased to 3.6% in December from previous -1.7%


01:18 Never mind FOMC, hat about CPI? - Nomura

Analysts at Nomura expect core CPI in November to increase 0.2% (0.174%) m-o-m, a slight deceleration from October’s 0.225%, but keeping the y-o-y rate unchanged at 1.8% (1.765%). 

Key Quotes:

"For November, core goods prices likely increased modestly, supported by another increase in used vehicle prices partly boosted by hurricane-related demand. 

In addition, the recent stabilization of import prices likely contributed to a flattening out of other core goods prices after recent declines. 

Core service prices likely increased steadily, albeit at a slightly slower pace than October. A solid increase in rent inflation combined with a modest uptick in medical care prices likely contributed to a moderate increase in core service prices. 

For noncore components, food prices likely increased slightly during the month, supported by a trend-like increase in food away from home prices and we expect a moderate increase in food at home prices, the other subcomponent of food prices. 

We expect that CPI’s energy prices overall likely rebounded during November, primarily driven by a surge in retail gasoline prices. 

Altogether, we expect a 0.402% m-o-m increase in headline CPI inflation, corresponding to a 2.2% rate on 12-month basis. Our forecast for CPI NSA is 246.716."


01:02 South Korea Unemployment Rate: 3.7% (November) vs 3.6%


01:00 A mixed day in New York ahead of FOMC - ANZ

Analysts at ANZ explained that Global equities rose, the US dollar was mixed, and treasury yields lifted after some further solid data and ahead of some key central bank decisions over the next day or so. 

Key Quotes:

"European bourses were led higher by the CAC 40, which recorded a 0.8% gain, while other regional indices added around 0.5-0.6%. In the US, the DJIA and S&P 500 are currently up 0.5% and 0.4% respectively. Telecommunication stocks led gains in the latter."

"A number of stronger inflation prints generally weighed on fixed income markets, with the 10-year yield in the US and UK both up around 2bps to 2.41% and 1.22% respectively."

"In currency markets, the USD was mix against the G10 with SEK rising 0.7%, while expectations of M&A flows supported the AUD. Oil prices fell from a four day high with Brent crude down 1.9% to $63.5/bbl. Gold was reasonably stable at $1241/oz." 


00:46 NZD/USD: stuck at familiar resistance before FOMC

  • NZD/USD consolidates ahead of next leg up?
  • NZD/USD probably depends on the FOMC from here.

The Kiwi was mostly holding gains from the 10th Dec rally to 0.6952 recent highs in the NY session and is at a standstill in the early Asian shift. Currently, NZD/USD is trading at 0.6933, down -0.08% on the day, having posted a daily high at 0.6941 and low at 0.6932.

FOMC meeting preview: big noise, little substance?

Awaiting FOMC

NZD/USD is likely to continue consolidating without further domestic events and before the FOMC announcements tonight. "But it is fair to say the kiwi has held in well (despite some signs that the domestic economy is wobbling a little right now) and looks to be threatening a further modest squeeze higher, which is not unusual for this time of year," explained analysts at ANZ.

NZD/USD levels

Technicals lean bearish in the near term with the 10/21 hourly SMA crossover while the key support would not come in until 0.69 the figure while, on the wide, the technicals are leaning with a bearish bias also within the aggressive downtrend from 0.7557. The key target to the upside stays with 0.6979 Nov highs while 0.6820, if broken, could be a catalyst for 30th May 2016 territory on the wide down at 0.6680.


00:24 RBA s Lowe: Australian s to hold bulk of money in bank deposits

RBA's Lowe is speaking at an event entitled, "An electronic Aussie" with an address to the 2017 Australian Payment Summit. While there is noting on monetary policy,  he says that there is no case yet for issuing Australian dollars on blockchain for use with limited private systems, although adding that any form of electronic Australian dollar would best be issued by the RBA.

Some key notes:

Plausible that households, businesses will continue to hold bulk of money in commercial bank deposits.

History of private currency issuance is one of periodic panic and instability.

Says current fascination with cryptocurrencies a "speculative mania"

Hard to see cryptocurrencies being commonly used for everyday payments.

Any form of electronic Australian dollar would best be issued by the RBA.

Case for adding electronic form of Australian banknotes to payments mix has not been established.

Says few central bank peers see electronic banknotes on the horizon.

Says electronic banknotes could threaten financial stability, lead to bank runs.

Do not see case for RBA offering every Australian a bank account for making payments.

Says no case yet for issuing Australian dollars on blockchain for use with limited private systems.

About RBA Lowe  

Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012.


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