• USD is bid on broader risk aversion as global equities trade in the red amid disappointing economic data and widening yield spreads in Europe. Asian markets closed lower with the Nikkei 225 closing lower by about -0.83%, European bourses are in negative territory with the DAX currently down about -0.65% and U.S. stock futures are suggesting a negative open. Key employment data released just moments ago include the Dec. ADP employment report which surprised to the upside with a 325K print (cons. 178K prior 204K) and weekly initial claims which fell 15K to 372K from the prior 387K. Both of the figures came in better than anticipated which suggests the potential for a strong NFP reading tomorrow. Due out at 1000ET is the Dec. ISM services index which is expected to rise to 53.0 from the previous 52.0.
• EUR takes another leg lower after poor data and a French bond auction. German retail sales unexpectedly fell by -0.9% m/m in Nov. (cons. +0.2%) and EZ industrial new orders were softer than anticipated at 1.8% m/m (cons. 2.5%). France sold 4.02B euros of 10-yr bonds at an average yield of 3.29% from the prior 3.18% while the bid-to-cover ratio fell to 1.64 from 3.05 at the previous auction. EUR crosses made fresh lows with EUR/JPY trading as low as nearly 98.50, EUR/GBP trading towards the 0.8250 level and EUR/AUD under pressure below the 1.25 figure. Against the buck, the EUR approached the 1.28 figure before rebounding slightly after the US labor data.
• GBP is trading mixed after a better than expected services PMI number which rose to 54.0 in Dec. from the prior 52.1 while the market was forecasting a decline to 51.5. Cable broke support below the 21-day SMA and 100-hour SMA which converge around the 1.5570 level and fell towards the 1.55 figure. Currently, the pound is weakest against the USD and strongest against the EUR.
• JPY gaining against most of the G10 currencies except against the USD and CAD as investors seek safety in the yen. Japan’s monetary base grew 13.5% in Dec. y/y and vehicle sales rose by 23.5% y/y in Dec. USD/JPY is trading higher after yesterday’s daily doji candlestick and the pair may face resistance around the 100-day SMA that comes in just above the 77.00 figure. EUR/JPY continues to press lower as the yen is strongest against the EUR so far today in the G10 space.
• CAD soft against the USD but outperforming against the rest of the majors as developments in the Middle East keep oil prices firm. WTI crude is relatively unchanged at time of writing and holding around the $103 level. Data out of Canada showed Nov. industrial product prices unexpectedly rising by 0.2% m/m (cons. -0.1%) and Nov. raw materials price index gaining 3.8% m/m vs. expected 0.5%. USD/CAD nearly reached the 1.02 figure which is where the 55-day SMA comes in before correcting lower as it currently trades around 1.0145 – just above the 1.0140 100-day SMA. Due out at 1000ET is the Ivey PMI for Dec. which is anticipated to fall to 58.0 from the prior 59.9.
• AUD is broadly lower following a disappointing decline in the Nov. trade surplus. The market was looking for a rise to 1650M from the prior 1418M, however data showed a drop to a surplus of 1380M. AUD/USD dropped from session highs of nearly 1.0370 to current levels of around 1.0280 and sees the daily Tenkan line at around 1.0215 just ahead of the 100-day SMA which comes in around the 1.02 figure.
• EUR takes another leg lower after poor data and a French bond auction. German retail sales unexpectedly fell by -0.9% m/m in Nov. (cons. +0.2%) and EZ industrial new orders were softer than anticipated at 1.8% m/m (cons. 2.5%). France sold 4.02B euros of 10-yr bonds at an average yield of 3.29% from the prior 3.18% while the bid-to-cover ratio fell to 1.64 from 3.05 at the previous auction. EUR crosses made fresh lows with EUR/JPY trading as low as nearly 98.50, EUR/GBP trading towards the 0.8250 level and EUR/AUD under pressure below the 1.25 figure. Against the buck, the EUR approached the 1.28 figure before rebounding slightly after the US labor data.
• GBP is trading mixed after a better than expected services PMI number which rose to 54.0 in Dec. from the prior 52.1 while the market was forecasting a decline to 51.5. Cable broke support below the 21-day SMA and 100-hour SMA which converge around the 1.5570 level and fell towards the 1.55 figure. Currently, the pound is weakest against the USD and strongest against the EUR.
• JPY gaining against most of the G10 currencies except against the USD and CAD as investors seek safety in the yen. Japan’s monetary base grew 13.5% in Dec. y/y and vehicle sales rose by 23.5% y/y in Dec. USD/JPY is trading higher after yesterday’s daily doji candlestick and the pair may face resistance around the 100-day SMA that comes in just above the 77.00 figure. EUR/JPY continues to press lower as the yen is strongest against the EUR so far today in the G10 space.
• CAD soft against the USD but outperforming against the rest of the majors as developments in the Middle East keep oil prices firm. WTI crude is relatively unchanged at time of writing and holding around the $103 level. Data out of Canada showed Nov. industrial product prices unexpectedly rising by 0.2% m/m (cons. -0.1%) and Nov. raw materials price index gaining 3.8% m/m vs. expected 0.5%. USD/CAD nearly reached the 1.02 figure which is where the 55-day SMA comes in before correcting lower as it currently trades around 1.0145 – just above the 1.0140 100-day SMA. Due out at 1000ET is the Ivey PMI for Dec. which is anticipated to fall to 58.0 from the prior 59.9.
• AUD is broadly lower following a disappointing decline in the Nov. trade surplus. The market was looking for a rise to 1650M from the prior 1418M, however data showed a drop to a surplus of 1380M. AUD/USD dropped from session highs of nearly 1.0370 to current levels of around 1.0280 and sees the daily Tenkan line at around 1.0215 just ahead of the 100-day SMA which comes in around the 1.02 figure.