10 Jan: US$ extends recovery, underpinned by higher yields while the Yen is up on BOJ move.China CPI ahead.

By | January 10, 2018

 

 

The currency markets have been mixed on Tuesday, with the Yen in focus after the BOJ said yesterday that it would be tweaking its purchases of JGBs and cutting the amount that it will be buying in future. It has been a choppy ride for the Yen since then, but at the end of the session the dollar does remain under some pressure as Yen demand is still apparent. Elsewhere though, the dollar has been in demand, particularly against the EU majors, with the Euro looking heavy despite some more decent EU data. Today saw the EU unemployment rate fall to 8.7% in November, down from 8.8%, meeting expectations, to be at the lowest level in nearly 9 years since 2009. Also released from Europe, the German industrial production rose 3.4% mm in November while the German trade surplus widened to EUR 22.3 bio. The commodity currencies are mixed as speculation for a January rate hike from the Bank of Canada continue to grow although the Aud$ saw an early slide in Europe. Note that US yields moved higher today (10 year; 2.55%), further underpinning the dollar. In other markets, stocks continue to climb ever-higher, while the metals are a little lower on the back of the stronger dollar. Oil is at a 3 year high, underpinned by  OPEC-led production cuts, expectations of stronger demand and speculation that that U.S. crude inventories have dropped for an eighth week.

Asia will kick off with the Australian NAB Business Conditions/Confidence (Dec) and the China CPI (exp 0.4% mm, 1.9% yy) and PPI (exp 4.8%yy). The main event in Europe will be the UK NIESR GDP Estimate and Manufacturing/Industrial Production and Trade Balance for November, while the US will look to the Import/Export Index for guidance, along with speeches from the Fed’s Evans and Bullard. The EIA Crude Oil Stocks Weekly Change will be released late in the day.

CURRENCIES
EURUSD: 1.1937
Res  1.1960  1.2000  1.2050
Sup  1.1915  1.1885  1.1850
USDJPY: 112.63
Res  112.80  113.00  113.20
Sup  112.40  112.20  112.00
GBPUSD: 1.3540
Res  1.3555  1.3585  1.3615
Sup  1.3505  1.3470  1.3425
USDCHF: 0.9830
Res  0.9840  0.9860  0.9885
Sup  0.9815  0.9795  0.9775
AUDUSD: 0.7826
Res  0.7835  0.7850  0.7875
Sup  0.7805  0.7790  0.7765
NZDUSD: 0.7160
Res  0.7190  0.7215  0.7245
Sup  0.7150  0.7125  0.7105
INDICES / COMMODITIES
S&P: 2750
Res  2760  2765  2770
Sup  2750  2745  2740
DJI: 25358
Res  25410  25450  25500
Sup  25360  25320  25290
ASX SPI: 6108
Res  6115  6130  6150
Sup  6090  6075  6060
XAUUSD: 1312
Res  1315  1320  1325
Sup  1310  1305  1300
XAGUSD: 16.94
Res  17.10  17.20  17.30
Sup  16.90  16.80  16.70
WTI: 63.43
Res  63.50  64.00  64.50
Sup  62.50  62.00  61.50