Global FX Brief Nov 16: Ireland RBA Statement And Inflation Concerns Dominate FX... |
Bias to safety fx though specific rankings today have as much to do with specific news items. Strongest: CAD, USD, GBP, in that order, weakest JPY, AUD, EUR in that order.
Key fx events thus far: higher UK CPI boosts GBP, higher US bond yields and EU worries bolster USD, weigh on GBP. RBA statement suggests rates to stay steady into 2011 weigh on the AUD. US PPI, TIC are key events coming later.
US Dollar Daily Outlook: Up vs. all except slightly lower vs. the CAD, aided by better than expected retail figures (consumer spending is about 70% of GDP) and rising US bond rates that imply rising short term USD rates sooner than expected. The USD is giving up some of its gains vs. the EUR, GBP, and CHF thus far today.
Euro Daily Outlook: Down vs. all but the JPY, AUD on assorted concerns about Ireland, Greece, and Portugal. Rising US bond yields also strengthen the USD and thus weaken the EUR. Today’s just out German ZEW sentiment was much better than expected and may give the EUR a boost going forward today.
Yen Daily Outlook: Down vs. all over the past 24 hours despite retreating risk appetite for the second straight day as the long JPY trade continues to unwind, fueled by rising US bond rates, and EUR weakness, both of which boost the USD, which is the Yen’s primary counterpart.
British Pound Daily Outlook: Up vs. all except the USD, CAD, NZD, still strong after the BoE inflation report and now the just released today higher than forecasted core CPI y/y today confirms UK inflation concern and thus further strengthens prospects for less stimulus and more tightening of money supply, boosting GBP.
Australian Dollar Daily Outlook: Down vs. all except the JPY as today’s RBA statement suggests rates will hold steady into next year. The AUD is also suffering under reduced China growth expectations after last week’s higher than expected China inflation data.
New Zealand Dollar Daily Outlook: Down vs. all except up vs. the JPY, EUR, and AUD
Canadian Dollar Daily Outlook: Up vs. all despite falling oil prices today, no specific news behind the move, odd considering that most other risk assets like stocks, commodities, and risk fx are all lower. Most of the gains over the past 24 hours were from yesterday, thus far today the CAD is ceding back some of those gains.
Swiss Franc Daily Outlook: Down vs. the CAD, USD, GBP, up vs. all others. No specific CHF news, so the Franc appears to be benefitting from the mild bias to safety thus far today.
DISCLOSURE & DISCLAIMER: NO POSITIONS, THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER
About the author: Ava FX Analysts Department
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