Daily Forex Fundamental Analysis – Jan 5, 2018

The dollar barely drew any support from upbeat leading jobs indicators. The Challenger job cuts report printed a 3.6% drop in layoffs, bringing the annual total of job cuts down to its lowest level since 1990. The ADP reading also beat expectations with a 250K gain versus the 191K figure, but the earlier reading was downgraded from 190K to 185K. The NFP report is due today and analysts expect an increase of 190K, slower than the earlier 228K gain.
The euro continued to advance against most of its peers on the heels of hawkish ECB rhetoric earlier in the week and a couple of upside surprises in medium-tier data. German retail sales, French preliminary CPI, and the region’s flash CPI readings are up for release today. Another round of upbeat results could continue to stoke expectations of ECB rate hikes later this year, following their taper plans this month.
The pound wasn’t too far behind as the UK currency was able to benefit from better than expected services PMI. The reading rose from 53.8 to 54.2, a notch higher than the 54.1 consensus. There are no major reports due from the UK today.
The franc was mostly weaker against its higher-yielding peers as risk-taking was in play. There were no reports out of the Swiss economy in the latest sessions and there are no reports due today, which suggests that franc pairs could keep moving in line with market sentiment or currency-specific factors.
The yen was also one of the weaker performers as risk-taking took its toll on the lower-yielding currency. Japan’s final manufacturing PMI was downgraded from 54.2 to 54.0 to indicate a slower pace of industry growth. There are no reports due from Japan today, so the yen could be more sensitive to bond yields and dollar price action.
Commodity Currencies (AUD, NZD, CAD)
The Loonie got a boost from better than expected underlying inflation figures from Canada. Both the RMPI and IPPI posted strong upside surprises, signaling positive inflationary pressures down the line and shoring up BOC hike hopes. Earlier today, Australia printed a weaker than expected trade balance with a surprise deficit of 0.63 billion AUD instead of the estimated 0.55 billion AUD surplus.
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With an upbringing rooted in deep ethical values, Yashu Gola knows how to put honesty and dedication into his articles. This young and dynamic financial analyst has done his graduation in IT engineering. His interests in financial writing have once brought him to our digital doorsteps. Since then, he has been an integral part of ForexMinute.com and writes the most captivating news-articles on the foreign exchange industry, cryptocurrencies, and medical marijuana trading.