Daily FX Trading Update: USD Hit by Profit-Taking – Dec. 9, 2014

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Daily FX Trading Update: USD Hit by Profit-Taking - Dec. 9, 2014

The US dollar returned some of its latest FX trading gains at the start of the week as forex traders booked profits off key levels. USDJPY retreated below the 121.00 handle while GBPUSD recovered above 1.5600. The US labor market conditions index came in at 2.9, down from the previous 3.9 reading, which was already downgraded from 4.0. This indicates that other labor components might not have seen such strong improvements as the NFP report indicated. For today, only the JOLTS job openings report and wholesale inventories are up for release.

The euro was able to make a sigh of relief against the dollar yesterday, with a bit of strength in euro zone data. The Sentix investor confidence reading improved from -11.9 to -2.5, outpacing the consensus at -9.9 and indicating that pessimism is no longer as bad as before. German and French trade balance are up for release today and these might not have such a huge impact on euro FX trading movement.

FX Trading Fundamentals

The pound was able to recover in recent FX trading, despite the lack of data from the UK economy. For today, the manufacturing production report is up for release and it might show a bleak 0.2% gain, lower than the previous 0.4% increase. Weaker than expected data could lead to a return of pound weakness while strong figures could lead to more gains.

The franc took advantage of dollar FX trading weakness while consolidating to the euro as usual. Data from Switzerland was mostly weaker than expected, as the CPI stayed flat while retail sales marked a smaller than expected 0.3% uptick. This was far below the estimated 0.9% annualized gain. Swiss unemployment rate is up for release today and it might print no change at 3.2%.

The yen recovered against most of its FX trading counterparts, thanks to profit-taking at key levels. The final GDP reading revealed that the economy contracted worse than expected at a 0.5% decline in growth versus the initially reported 0.1% drop. Preliminary machine tool orders data is due today but this might not push yen pairs around so much, with market sentiment likely to play a key role in price action.

The comdolls were unable to take advantage of dollar weakness, as the Aussie, Kiwi, and Loonie continued to edge lower to the Greenback. Canadian housing starts and building permits data were both weaker than expected, as the former logged in a 196K increase versus the projected 201K gain while the latter indicated a 0.7% uptick versus the projected 2.1% jump. In Australia, NAB business confidence fell from 5 to 1, reflecting a downturn in optimism. No other reports are due from the comdoll economies today.

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.