Currency Updates:
AUD/USD short covering was the there for Europe & NY. Once AUD/JPY’s slide abated Europe lifted AUD/USD off the 0.8065/70 area and had it at the 200-HMA into NY’s open. NY kept the squeeze going after retail sales was well below estimates. AUD/USD spiked up to 0.8180. The lift was aided by JPY weakness that allowed AUD/JPY to recover losses and near the 95.55/60 area, AUD/USD did slip late in NY as USD strength emerged. The pair sat near 0.8140 late in the day. Traders new look to the Dec Oz jobs report later. The employment data is forecast to deteriorate. A reading below estimates should increase thoughts an RBA cut is due. AUD/USD should then trade heave and we may see a retest of the 2015 low in the near future.
EUR/USD The ECJ ruling on the OMT program sank EUR/USD in Europe’s morning to hit a low of 1.1728. Short covering had it near 1.1760 into NY’s open and just slightly highs into retail sales. The big miss and downward revisions to prior sales data sent US bond yields and the USD tumbling. EUR/USD spiked up to a 1.1846 high. Offers into the 200-HMA and hourly highs near 1.1850/60 prevented further gains. The USD’s slid abated and the losses began to erode. EUR/USD slide from the highs and filled the post-data gap. Little bounce was seen though as the USD firmed in the afternoon and the pair sat just above 1.1775 late in the day. There are some short squeeze risks as a doji has formed after the new low was set, daily RSI diverged and yield spreads narrow a bit. However the long-term trend remains down and the market looks to fade rallies. Sellers are touted in the 1.1870/00 region for now.
USD/JPY The decks were stacked against the USD/JPY and EUR/JPY intraday, the former due to a huge downside miss in US Retail Sales, and the latter due to an ECJ opinion that leveled a potential roadblock to ECB QE next week. USD/JPY was already in decline with the N225 & Tsy yield spreads before the Sales data slammed it to a 116.07 session low ahead of good and perhaps PKO bids into 116 and above the Dec N225 futures low of 16,525. A sharp rebound in oil prices and lessening of losses in Tsy yields and stocks helped USD/JPY rebound toward Tuesday’s 117.52 low. Today’s long Candle wick and low above the Dec swing low & 50% Fibo by 115.50 take some of the technical sting out the intraday dive, but the daily tenkan about to cross below the Kijun, with both lines and prices now inside the Cloud, the base of which is at 113.53, equaling the 50% retrace of the Oct-Dec rally. A close above the Cloud top at 118,75 on Thur is needed to undo some of this week’s damage. EUR/JPY fell to 137.02, holding above stops below the figure and the weekly Cloud base at 136.82. Will ECB QE & eased EC fiscal rules be enough to revive EZ growth/CPI prospects?
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Food Price Index* Dec -0.5%-prev
• 23:50 JP Corp Goods Price MM* Dec f/c-0.3%, -0.2%-prev
• 23:50 JP Corp Goods Price YY* Dec f/c 2.1%, 2.7%-prev
• 23:50 JP Machinery Orders MM* Nov f/c 5%, -6.4%-prev
• 23:50 JP Machinery Orders YY* Nov f/c -5.8%, -4.9%-prev
• 00:30 AU Employment* Dec f/c 3.8k, 42.7k-prev
• 00:30 AU Full Time Employment* Dec 1.8k-prev
• 00:30 AU Participation Rate* Dec f/c 64.7%, 64.7%-prev
• 00:30 AU Unemployment Rate* Dec f/c 6.3%, 6.3%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
