Article Highlights

  • Australia’s AIG services index up from 51.1 to 57.7 in December
  • Japan’s monetary base (y/y) inches up from 21.5% to 23.1% vs. 22.3% expected
  • China’s Caixin services PMI up from 53.1 to 53.4 vs. 53.3 expected
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The Greenback was the biggest loser of the trading session, as Asian session forex traders priced in the Fed’s less-hawkish-than-expected meeting minutes.

Major Events:

China’s Caixin services PMI – According to a private survey of small and medium businesses, the service sector continued to expand in December 2016. Caixin’s services PMI came in at 53.4, up from 53.1 in November and beat the expected 53.3 reading.

A closer look tells us that new businesses rose at a fastest pace in 17 months, while business expectations hit a four-year high. On the other hand, the employment sub-component remained low and input prices rose to its fastest pace in two years. Not a good sign considering that higher raw materials was the culprit for higher prices and that stiff competition is holding producers back from raising prices.

Still, the December figure marks the highest since July 2015, and is well above the 50.0 mark that indicates industry expansion. Chinese investors cheered the news especially as it comes in the heels of an upside beat of Caixin’s manufacturing PMI earlier this week.

Overall dollar weakness – The Greenback slumped across the board following a less-hawkish-than-expected FOMC meeting minutes. As mentioned in my U.S. session recap, the release revealed that some members prefer adjusting their estimates even as others are pushing for faster tightening.

Even more importantly, a chunk of the Fed’s optimism can be attributed to Trump’s campaign promises to cut taxes and other fiscal policy decisions. And, with only a few days left until Trump officially takes over as POTUS, some investors are choosing to take profits than deal with the overall uncertainty.

Major Market Movers:

USD – The dollar fell across the board following a bit of profit-taking after the FOMC meeting minutes was released.

EUR/USD jumped by 54 pips (+0.52%) to 1.0520, USD/CHF slid by 44 pips (-0.43%) to 1.0187, and USD/JPY dropped by a whopping 115 pips (-0.98%) to 116.46.

It also wasn’t any match against the comdolls with AUD/USD rising by 29 pips (+0.40%) to .7293, USD/CAD dipping by 34 pips (-0.26%) to 1.3280, and NZD/USD popping up by 46 pips (+0.66%) to .6988.

JPY – Though there were no major reports from Japan, the sharp moves in USD/JPY dragged other major yen crosses down with it.

EUR/JPY is down by 55 pips (-0.45%) to 122.54, GBP/JPY is down by a whopping 132 pips (-0.91%) to 143.51, and AUD/JPY is down by 49 pips (-0.57%) to 84.94.

Watch Out For:

  • 9:15 am GMT: Switzerland’s monthly CPI (-0.1% expected, -0.2% previous)
  • 10:10 am GMT: Euro Zone retail PMI
  • 10:30 am GMT: U.K. services PMI (54.8 expected, 55.2 previous)
  • 11:00 am GMT: Euro Zone PPI (0.2% expected, 0.8% previous)

See also:

U.S. Session Recap
London Session Recap

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