After the Kiwi’s massive FX trading selloff yesterday, the Australian dollar followed suit as its jobs report turned out to be a huge disappointment. The report showed a 0.3K decline in hiring versus the estimated 13.5K gain and the previous 14.9K increase, bring the jobless rate up from 6.0% to 6.4%. Canadian trade balance was better than expected as it showed a return to a 1.9 billion CAD surplus instead of the estimated 0.1 billion CAD deficit. Canadian building permits and Ivey PMI are up for release later today and another set of strong figures could lead to more gains for the Loonie.
The US dollar gave up some ground to its major FX trading counterparts, despite stronger than expected trade balance from the US. Risk appetite improved somewhat although sentiment remains shaky. The trade deficit landed at 41.5 billion USD versus the estimated 44.2 billion USD reading. For today, only the initial jobless claims is up for release from the US and it might reflect another positive trend in hiring, which could keep the dollar supported.
FX Trading Fundamentals
The euro had a relief rally in recent FX trading even as data from the euro zone disappointed. German factory orders marked a 3.2% decline instead of showing the estimated 0.5% gain while the Italian GDP showed a 0.2% contraction instead of the projected 0.1% gain. For today, German industrial production is up for release and it might show a 1.4% rebound from the previous 1.8% drop, but the bigger mover could be the ECB interest rate statement. No changes are expected but Draghi’s remarks could have a significant impact on the euro.
The pound resumed its weak FX trading behavior as data from the UK disappointed. The manufacturing production report showed a mere 0.3% uptick instead of the projected 0.7% rebound. Industrial production also fell short of expectations and showed a 0.3% gain instead of the expected 0.6% increase. Later today, the BOE will make its interest rate statement and probably keep monetary policy unchanged. Any accompanying remarks or potential changes in bias could direct pound movement.
The franc recovered to most of its major counterparts in recent FX trading sessions as Swiss CPI came in slightly better than expected. The figure showed a 0.4% decline in price levels versus the estimated 0.5% drop. SECO consumer climate data and Swiss foreign currency reserves data are up for release today and might drive the franc in a clearer direction.
The yen raked in gains against its FX trading rivals as the Nikkei ended more than 1% lower for the day. Risk appetite was weak during the Asian trading session and the lower-yielding yen was able to benefit from this. There were no reports released from Japan yesterday and there are none due today, leaving the yen vulnerable to risk sentiment.
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