Daily FX Trading Update: Relief Rally After Greek Political Drama – Dec 11, 2014

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Daily FX Trading Update: Relief Rally After Greek Political Drama - Dec 11, 2014

The US dollar was still in a weak spot in recent FX trading as the recent selloff sparked more profit-taking moves. There have been no major reports released from the US economy yesterday while today has retail sales figures on tap. Headline retail sales could pick up by 0.4% in November while core retail sales might see a 0.1% uptick. Analysts are watching out for an upside surprise, as the surge in spending during the Thanksgiving sales and early shopping for the holiday season could lead to stronger gains.

The euro extended its rally to most of its counterparts, as FX trading participants found a bit of relief in the Greek political situation. Earlier in the week, talks of seeing more uncertainty in Greece, which could worsen their debt situation and lead to a euro zone exit, weighed on the shared currency. However, the knee-jerk market reaction has been faded in the past couple of days even as medium-tier data from the euro zone has been weak. German and French CPI are up for release today, along with the Italian industrial production report, and these might not have such a huge impact on euro movement.

FX Trading Fundamentals

The pound edged slightly higher in recent FX trading since the UK trade balance came in line with expectations. The report showed a 9.6 billion GBP deficit, smaller than the previous 9.8 billion GBP shortfall. There are no major reports due from the UK today, which suggests that pound pairs could be sensitive to risk sentiment.

The franc continued its advance to the dollar, despite the lack of major reports from Switzerland. Today could be a different story though, as the SNB is set to make its monetary policy announcement. No actual changes are expected, although Thomas Jordan is likely to reiterate their pledge to defend the franc peg.

The yen was able to take advantage of the risk-off FX trading market sentiment recently, as it rallied to the dollar and most of its counterparts. Data from Japan released earlier today came in weaker than expected, as the core machinery orders report indicated a 6.4% decline versus the projected 2.1% drop. Tertiary industry activity fell by 0.2% versus the estimated 0.1% dip. No other reports are due from Japan today.

The comdolls extended their recovery in recent FX trading, headed mostly by the Kiwi which benefitted from the RBNZ rate statement. Even though many were expecting to hear dovish remarks from the central bank, Wheeler’s remarks sparked a Kiwi rally when he spoke of the need to watch housing inflation. In Australia, the jobs report showed a stronger than expected 42.7K hiring gain versus the projected 15.2K increase, but the previous month’s report was downgraded significantly and brought the jobless rate up from 6.2% to 6.3%.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.