otc fx

Dollar Flat Despite Poor Data, Aussie Shines on Strong Jobs Report

Summary: FX markets were mostly quiet, with the Dollar roughly flat ahead of today’s US GDP report and next week’s holidays. Wall Street stocks rose, hitting all time highs as investors ignored President Trump’s impeachment by the House and a set of poor US economic reports. The Dollar Index (USD/DXY) ended at 97.379 from 97.387 yesterday, virtually flat. Currencies, however had different fortunes. The Australian Dollar jumped, outperforming to 0.6885 from 0.6845 following a strong Employment gain of 39,900, easing beating forecasts of 14,500. Australia’s Unemployment rate dipped to 5.2% from 5.3%. Sterling extended its drop below 1.30 before closing at 1.3010, a loss of 0.52%. The Bank of England left interest rates and policy unchanged while UK Retail Sales fell, missing forecasts. Brexit fears continued to dog the British Pound. The Euro ended little changed at 1.1125 from 1.1120 yesterday. USD/JPY slipped 0.25% to 109.27, the Japanese Yen the only major to respond to the poor US economic data. Equities rallied as risk sentiment stayed positive. The DOW closed 0.45% to 28,395. While the S&P 500 was 0.4% higher at 3,209., a fresh record.

US PHILLY FED MAN IND – FX Factory – 20 December 2019

Global bond yields were mostly lower. The US 10-year note yielded 1.91% (1.92% yesterday).
UK Retail Sales in November fell to -0.6%, widely missing forecasts at 0.3%. US Existing Home Sales fell to 5.35 million, against expectations of 5.44 million, its lowest in 5 months. US Philadelphia Manufacturing Index fell to 0.3 in December from 10.2 in November, missing forecasts at 8.1. US Weekly Unemployment Claims climbed to 234,000 against expectations of 225,000.

  • EUR/USD – The Euro closed at 1.1125 from 1.1120 yesterday. Trading in the shared currency was sleepy into tonight’s US GDP report. The overall range traded was 1.1107-1.1144.
  • AUD/USD – The Aussie Battler jumped after Australian employment in November created 39,900 jobs while the Unemployment rate dipped to 5.2% from 5.3%. Although most of the jobs created were part-time, the participation rate was at 66.00%. AUD/USD traded to a high at 0.68882 from an opening at 0.6855, the best performer in FX.
  • GBP/USD – While the Bank of England left interest rates unchanged, a weaker-than-forecast UK Retail Sales report and continued fears of a hard Brexit saw Sterling extend its losses. The British currency fell to 1.29902 lows before steadying to 1.3010 at the New York close.
USD JPY Hourly Chart – IG Daily FX – 20 December 2019
  • USD/JPY – the Dollar retreated against the Yen to finish at 109.27 (109.60 yesterday). The Dollar had been supported by strong economic reports earlier this week which reversed yesterday.

On the Lookout: US economic reports earlier this week (Building Permits, Housing Starts, Industrial Production, and JOLTS Job Openings) were strong and bolstered the Dollar. US Manufacturing PMI’s matched forecasts but were better than most Euro area PMI’s. Yesterday was the opposite and US data was dismal to say the least. A fall in the Philadelphia Fed’s Business Index conditions to 0.3 in December from 10.2 in November is huge, yet it was shrugged off by markets into tonight’s US Final Q3 GDP report. Today is the biggest data day before the year and decade end.  Other reports today are Japan’s National Core CPI (Y/Y) for November, German GFK Consumer Climate Index, French Consumer Spending and Eurozone Current Account and Consumer Confidence. The UK reports on its Current Account, Final Q3 GDP, Public Sector Net Borrowing. The Bank of England releases its Quarterly Economic Bulletin. Canada’s Core and Headline Retail Sales follow. Finally, we have the US Final Q3 GDP, GDP Price Index, Core PCE Price Index, Personal Spending, Personal Income and revised University of Michigan Consumer Sentiment. The US Treasury releases its Treasury Currency report.

Trading Perspective: Expect consolidation in FX this morning ahead of today’s data dump. It will be the last set of relevant economic data for the year. The Dollar began a recovery following the strong US economic reports earlier this week. Last night US data did a complete U-turn, and every report had a poor result, while missing expectations. This will put the Greenback under pressure until the release of tonight’ US Q3 Final GDP report (12.30 am tonight in Sydney). Market positioning is also long US Dollars which will add pressure to the downside.

GBP Chart – Investing.Com – Hourly – 20 December 2019
  1. EUR/USD – The Euro held above the 1.11 level all week with last night’s 1.11072 the low. The Euro has traded in a lacklustre manner between 1.11072 and 1.11745 most of the week. Immediate support on the day for the Euro lies at 1.1120 followed by 1.1105. Immediate resistance can be found at 1.1150 (overnight high traded 1.11442) followed by 1.1180. Look for the Euro to consolidate within a likely 1.1120-70 range today. Prefer to buy dips.
  2. AUD/USD – The Australian Dollar closed in New York at 0.6885 from 0.6852 yesterday. The strong Australian Jobs report boosted the Aussie Battler to a high at 0.68882 overnight. Immediate resistance can be found at 0.6900 followed by 0.6930. We find immediate support at 0.6865 followed by 0.6865. We highlighted that Aussie short bets stayed at -AUD 36,808 contracts earlier this week. With the market short, a weak US GDP report could see a sustained break of 0.69 cents in the Aussie Battler.
  3. GBP/USD – Sterling extended its post-election drop following a weak UK Retail Sales report. The Bank of England kept interest rates steady but continued to watch carefully on Brexit developments. Boris Johnson presents his plans for Brexit, as well as bills on health, crime and trade in the House of Commons today. Sterling has immediate resistance at 1.3050 followed by 1.3080. Immediate support lies at 1.2990 (overnight low 1.29902) followed by 1.2950. Look for consolidation within a likely 1.2980-1.3080 range today.
  4. USD/JPY – The Dollar slipped 0.25% against the Yen to 109.27 on the poor US economic reports. Japan’s 10-year JGB yield rose 2 basis points to -0.01% following the BOJ’s decision to keep its interest rates and policy steady. The US 10-year bond rate was one basis point lower to 1.91%. This should keep USD/JPY under pressure until the release of tonight’s US Q3 Final GDP report. Immediate support lies at 109.15 (overnight low 109.182). The next support level lies at 108.95. Immediate resistance can be found at 109.65 (overnight high 109.685) followed by 109.90. Look for a likely range today of 109.10-60. Prefer to sell rallies.

Happy Friday and trading all.