US Jobs Data to test USD strength into the New Year

Last week’s currency trading review

The Dollar was able to gain against its two biggest partners in the Euro and the Yen with US economic data continuing to show improvement. December Chicago PMI jumped to 60 vs. 56.1 previously. Also promising was the Weekly Jobless claims at 432k vs. 460k forecast. The link between a strong USD and strong US economic data is growing of late overtaking the stock-market as the main driver of direction. The Euro although the market was quite contained in holiday trade the Euro failed to break above 1.4440 on a few occasions and the pair slipped back to the lower end on the range by the weeks end. EUR/JPY was able to show some small gains but EUR/GBP and EUR/GBP were quite weak. Little Economic data was released but German December CPI did beat forecasts at 0.7% vs. -0.1% previously. The EUR/USD fell -0.38% closing at 1.4323, after opening the week at 1.4378.

The Japanese Yen losses accelerated across the board with the NZD/JPY up over +4% and AUD/JPY +3%. Risk appetite is now being expressed via the Yen crosses and the USD/JPY is a on a major move higher up from Y85 lows in November. November Industrial Production gained 2.6% vs. 0.5% previously m/m. The USD/JPY gained +1.59% closing at 93.01 after opening the week at 91.53. The GBP rebounded well against all except the risk currencies with sentiment improving and as technical buy signals emerged. The Pound has been under performing for most of the year and prone to these unexpected bouts of strength. December Nationwide House Prices showed a 0.4% rise as expected. GBP/USD gained +1.24% closing at 1.6124 after opening at 1.5963. The AUD rebounded well as the stable and quiet market conditions favored the high yielding pair. The AUD/JPY carry trade showed glimpses of the past and provided the support for the Aussie to gain against all the major currencies except the NZD. The AUD/USD gained +1.64% closing at 0.8973 after opening at 0.8826.

The forex trading week preview

In the States; On Monday, December ISM Manufacturing is forecast at 54 vs. 53.6 previously. On Tuesday, November Pending Home Sales forecast at -3.1% vs. -3.7% previously. On Wednesday, December ADP Employment Change Forecast at -75k vs. -169k previously. Also released, December FOMC minutes. On Thursday, Weekly Jobless claims are forecast at 449k vs. 432k previously. On Friday, December NonFarm Payrolls forecast at -3k vs. -11k previously. December Unemployment Rate forecast unchanged at 10.0%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, December German Unemployment Change forecast at 5k vs. -7k previously. December German Unemployment Rate forecast at 8.1%. Also on Tuesday, December CPI forecast at 0.9% y/y vs. 0.6% y/y previously. On Friday, Q3 GDP forecast at 0.4%. Finally on Friday, November German Industrial Production is forecast at 1.0% vs. -1.8% previously. In the UK; On Monday, December PMI forecast at 52 vs. 51.8 previously. On Wednesday, December PMI services forecast at 56.9 vs. 56.6 previously. On Thursday, BOE rate announcement forecast to remain at 0.5% with the Asset Purchase Program remaining at 200B. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; no major data release this week. In Australia; On Wednesday, November Building Approvals previously at -0.6%. On Thursday, November Trade Balance previously at -2379m. Also released, November Retail Sales previously at 0.3%. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY


Euro – 1.4330

Initial support at 1.4273 (Dec 30 low) followed by 1.4234 (Dec 24 low). Initial resistance is now located at 1.4458 (Dec 29 high) followed by 1.4481 (Oct 2 former low)

Yen – 92.80

Initial support is located at 91.41 (Dec 28 low) followed by 91.00 (Dec 22 low). Initial resistance is now at 92.3.13 (Dec 31 high) followed by 93.30 (Sept 7 High).

Pound – 1.6150

Initial support at 1.5833 (Dec 30 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.6236 (Dec 31 high) followed by 1.6248 (Dec 18 high).

Australian Dollar – 0.8990

Initial support at 0.8902 (Dec 30 low) followed by the 0.8857 (Dec 25 low). Initial resistance is now at 0.9011 (Dec 17 high) followed by 0.9070 (Dec 16 high).

Gold – 1097

Initial support at 1086 (Dec 30 low) followed by 1086 (Dec 22 low). Initial resistance is now at 1108 (Dec 29 high) followed by 1114 (Dec 28 high).

Oil – 79.70

Initial support at 79.10 (Intraday support) followed by 78.00 (Intraday support). Initial resistance is now at 80.00 (Key Psychological Level) followed by 82.00 (November High).