Sterling and Swiss Franc are so far the weakest major currencies in a quiet holiday trading week. The pound is weighed down by talks that the uncertainties over EU referendum in UK in 2016 would delay BoE's rate hike. Also, the central is no in a hurry to raise interest rate considering the low inflation, in particular with continuous weakness in oil price. Forward contracts based on Sonia are pricing in full change on rate hike only until January 2017. Technically, GBP/USD is staying in the choppy decline from 1.5929. While momentum is weak, the pair is still expected to head towards 1.4565 low. GBP/JPY also extended recent down trend from 195.86 and is expected to continue to 174.86 key medium term support next. EUR/GBP, on the other hand, might face some resistance from 0.7492 even though further rebound is in favor.
Dollar was lifted by better than expected consumer confidence reading overnight but was overwhelmed mildly by strength in Aussie and Kiwi. The Conference Board consumer confidence rose to 96.5 in December versus expectation of 93.9, up from prior month's 90.4. Trade deficit widened to USD -60.5b in November. S&P Case Shiller 20 cities house price rose 5.5% yoy in October. Traders are still reluctant to place neither bullish nor bearish bets on the greenback for the moment. The main question remains on the pace of rate hike in 2016, which could be once every quarter. But more solid economic data are needed to give Fed policymakers to do that. Dollar will ace the first challenge from December non-farm payroll on January 8.
Looking ahead, UK will release nationwide house price, Swiss will release UBS consumption indicator, Eurozone will release M3 money supply. US will release pending home sales and crude oil inventories.