Currency Updates:
AUD/USD After giving up all the retail sales inspired gains Europe lifted the pair off the day’s 0.8356 low. Profit taking had the pair near 0.8375 as NY got going. Early NY saw the lift gather pace as the USD went broadly offered on USD/JPY’s drop from the 119.95 area. AUD/USD near 0.8400 but made a quick spike down near 0.8360 on a combination of EUR/AUD’s lift from below 1.4660 towards 1.4780 and USD/JPY’s rebound. AUD/USD’s dip was bought though as the USD couldn’t manage a serious rally. AUD/USD rallied and hit 0.8421. The USD clawed back some losses in NY’s afternoon and this saw the pair slip lower and sit just above 0.8380 late in the day. Action in Asia is likely to be subdued as the market awaits the US jobs figures but the Oz Nov AiG PCI is due. A weak result may see AUD get hit as it will bolster the view that the Oz econ is struggling a bit. Bears are looking at 0.8315 as key s-t support for now.
EUR/USD The pair stayed 1.2300/30 for Europe’s morning ahead of the ECB & Draghi. Rates were left unchanged as f/c so focus was on Draghi’s presser. His initial remarks sent the pair to a new trend low 1.2278. Draghi initially stated asset buys will have a sizable impact on the b/s, reiterated the b/s reaching levels of early ’12 while also noting significant & increasing differences in mon pol cycles between major regions. The losses were short lived after Draghi noted that early next year would see a reassessment of monetary stimulus. The market saw this as no QE present for the holidays. EUR/USD took off & neared 1.2420. ECB projections for growth & inflation were lowered and the pair dipped to 1.2340. The dip was bought as broad USD weakness entered the market. The buys cleared the 200-HMA and a 1.2457 high was hit. The pair slid to 1.2360 after Europe’s close as the USD clawed back some losses. Late in the day the pair sat near 1.2370. The EZ Q3 GDP revision is due tomorrow but all eyes will be on US jobs data for trading cues.
USD/JPY A breakout above size 120 barriers, expiries and stops was delayed by Draghi disappointed those hoping for more explicit descriptions of further easing steps, either in the form of a clearer Q1 QE promise or a move to corporate bond buying or TLTRO tweaking. All of that was alluded to by Draghi, but as ECBers have noted recently, the timing of further easing (QE) would be after, not before, the Dec 11 TLTRO uptake. EUR/JPY’s surge stalled below the 149.12 Abenomics high on the unwinding of weak-handed short EUR trades, most to take profit. The seeming delay in ECB QE was initially viewed as a risk-off event which hurt stocks and limited the late Ldn breakout in USD/JPY beyond 120.00 to 120.25. Just as EUR shorts were looking to book some profits ahead of US NFP Friday, so, too, were USD/JPY longs, but in both cases the USD’s losses were trimmed as macros and longer-term participants bought into the USD dip. USD/JPY’s 119.32 low was a 38.2% retrace of this week’s 117.86-120-25 range. Prices are back by 120 heading into the NY close. EUR/JPY is closing below its 148.43 daily pivot (Nov 21 hi) & on hourly tenkan & kijun support.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Reserves Nov 1265.90b-prev
• 05:00 JP Coincident Indicator MM* Oct 1.4-prev
• 05:00 JP Leading Indicator* Oct 1.2-prev
• 22:30 AU AIG Construction Index Nov 53-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
