Currency Updates:
AUD/USD The pair held a very tight range in Europe’s morning ahead of the US jobs data. 0.8361/87 defined the action and the pair sat just above 0.8370 into the jobs data. The solid data print sent the USD &US bond yields soaring. AUD/USD made a quick dive to 0.8320 before any type of bounce took hold. A lift towards 0.8345 met sellers and the pair steadily slid lower for the remainder of the session. The pair made a new trend low that matched the July 2010 low at 0.8315. Very little bounce was seen and the pair sat near 0.8325 late in the day. The upbeat jobs data increases the odds of Fed rate lift-off in Q1 which would bolster the view of diverging CB mon pol as talk of RBA cuts has been upped this week. With AUD/USD closing the week near critical support it seems only a matter of time before it breaks and the pair makes a run for the May 2010 low at 0.8066.
EUR/USD The pair saw some bear pressure applied in Europe’s morning. It slipped from near 1.2385 to 1.2346 before bouncing a bit into NY’s open. The pair was just above 1.2350 as NY got going and sat just below 1.2370 into the US jobs data. The NFP had a solid beat as did average hourly earnings. This prompted the mkt to buy USD as it gets the Fed one step closer to rate lift-off which many expect in the first half of 2015. EUR/USD dived as yield spreads went further in USD’s favor. The pair erased all the post-ECB based gains and hit a new trend low of 1.2271. Action quickly settled though and the pair ranged between the day’s low and 1.2309. The pair settled the day closer to the low though. With the pair ending the week near its low, it seems only a matter of when and not if the 1.2240/55 support zone is cleared. Once that support breaks the pair has little in support until the July 20102 low.
USD/JPY If USD/JPY bulls had any doubts about keeping, or even adding to, their trades coming into today’s US Jobs report, they had none afterward. With the one caveat of a weak Household Survey, almost every other aspect of the Nov report was tailor-made to send Tsy yields and the USD higher. USD/JPY buyers made short work of 121.00 and 121.50 barriers, clearing the final 76.4% Fibo of the entire ’02-’11 slide at 121.06 along the way. Offers at 121.70, that echoed ones at 120.70 earlier in the day, finally put a lid on the advance for the day as the Ldn week ended. There isn’t much historical or technical resistance beyond some 122 expiries and barriers until the July ’07 high at 123.67, the ’07 Jun peak at 124.14 and the 161.8% Fibo-projected top derived from the Jun ’13 low and Jan ’14 high. 2-yr Tsy yields finally cleared the ’08-’09 lows by 61bp that they had been capped by for the last six months, suggesting game-on for a few rate hikes in ’15 & ’16. Versus the BOJ’s QQE2 and the lack of influence on JGB yields from rating agency downgrades, the c124 technical objectives look well within reach. EUR/JPY & GBP/JPY made new 6-yr highs due to heavy yen selling.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Manufacturing Sales* Q3 -0.7%-prev
• 23:30 JP Reuters Tankan DI Dec 13-prev
• 23:50 JP Bank Lending YY Nov 2.4%-prev
• 23:50 JP Current Account NSA JPY* Oct f/c 366.3b, 963.0b-prev
• 23:50 JP GDP Rev QQ Annualised* Q3 f/c -0.5%, -1.6%-prev
• 23:50 JP GDP Revised QQ* Q3 f/c -0.1%, -0.4%-prev
• 23:50 JP GDP Cap Ex Rev QQ* Q3 f/c 0.8%, -0.2%-prev
• 23:50 JP GDP QQ Pvt Cons Rev* Q3 0.4%-prev
• 23:50 JP GDP QQ External Dem Q3 0.1%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
