The euro sell off continued on EUR/USD as weakness from the single currency combined with a strong dollar forced the pair to a 7 month low of 1.0565 after opening at 1.0642. Euro regained a little bit of ground to close at 1.0618, however with a US rate rise on the horizon and continuing concerns regarding the Eurozone, forecasts are expecting a downward trend to continue into December.
US dollar continued its recent gains against the multi-currency markets yesterday aided by the above mentioned positive Durable Goods Orders data, posting an increase 3% against the expected figure of 1.5%. Initial Jobless Claims also came in below expectations at 260,000, some 10,000 below consensus.
The dollar index actually posted an 8 month high during yesterday’s trading, the index is a measure of the greenbacks performance against a basket of currencies of America’s largest trading partners. This rose above 100 for the first time since March 2015. It also strengthens the argument to raise interest rates at December’s meeting as policy makers said the decision will be based on “incoming data”.
Sterling gained over 1% on ZAR to close yesterday at 21.39, it’s only 2nd positive day close in 9 daily sessions. The pair peaked at a high of 21.4550 on the back Chancellors comments, before closing just below that level at 21.4500. Today the pair opened at 21.3518 and at the time of writing has regained that lost ground to be trading at 21.4580.
The NZD strengthened against sterling as the year on year figure for the country’s trade balance massively exceeded the markets expectations to come in below the consensus of $-3.37B at $-3.24B. Upon the news GBP/NZD dropped below the 2.30 level and has lost even more ground to trade at 2.2889.
AUD faced extreme selling pressure overnight as the news filtered out at 00.30 GMT that Australia’s private capital expenditure was well below market expectations of -2.9% to post a disappointing -9.2% for Q3. Following the news AUD lost over half a cent against USD and 80 pips versus GBP. GBP/AUD opened the European session at 2.0848 and has continued to rise, currently trading at 2.0869.
A quiet data ahead for the markets however tomorrow we will have the all important GDP figures for Q3, with no major changes expected with the consensus being 0.5% increase for Q3, whilst YoY figures expected to be 2.3%
UK News
With no macroeconomic data out from the UK yesterday, the market looked stateside for key data releases ahead of today’s public holiday for the traditional Thanksgiving Day.
Cable opened the European trading session at 1.5079, and traded within Wednesday’s high (1.5155) and low (1.5052) of the day, failing to break out in either direction. Sterling found support at 1.5053, and despite a strong headline figures from the Durable Goods Orders released at 13.30 GMT, sterling finished the session strongly to close at 1.5119.
Sterling recovered from a two day losing streak against the single currency to close almost 0.5% up from the day’s opening of 1.4167, to end the session trading above the key 1.42 level at 1.4226. The Euro weakened upon the market hearing that at the bi-annual Financial Stability Review, the ECB warned of a “sharp repricing in global risk premia” – yet another indication of the central banks intentions regarding further QE at Decembers meeting.
Yesterday also saw the Chancellor take center stage in the house of commons with the UK Autumn Statement, essentially promising to protect economic security with more balanced growth and one million new jobs to be created within the next 5 years.
