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With not a lot of data on the docket, Asian session forex players caught up to their U.S. counterparts and priced in a not-so-worrying NFP report.

Meanwhile, the Aussie (and Kiwi) took some hits on the back of the Australian government predicting lower iron ore prices for 2018.

  • Japan’s markets out on Coming-of-Age Day holiday
  • Australia’s AIG construction index slips from 57.5 to 52.8 in December
  • Australian government: iron ore prices to dip by 20% in 2018

Major Events/Reports:

Overall dollar strength

Last Friday’s NFP number may have missed analysts’ estimates, but it doesn’t seem to have dented the Fed members’ plans to raise rates at least three times this year.

San Francisco Fed President John Williams, for example, told Reuters last Saturday that the Fed could tighten more aggressively if the tax cuts boost the already strong economy.

Ditto for Federal Reserve Bank of Cleveland President Loretta Mester, who said that the combo of low unemployment and rising U.S. economic growth warrants around FOUR rate hikes this year. Wowza!

Iron ore prices to dip by 20% in 2018?

Earlier today the December edition of Resources and Energy Quarterly was published and shook the Aussie.

See, in it was the Office of the Chief Economist forecasts saying that iron ore prices could fall 20% in real terms in 2018. This could drag prices to $51.50 per metric tonne, down from the $64.30 figure seen at the end of 2017.

The office shared that beyond the first half of the year, prices are expected to “decline to US$49 a tonne, reflecting growing supply from low-cost producers in Australia and Brazil, and moderating demand from China as steel production eases.”

Major Market Mover(s):

USD

The dollar saw gains across the board as Asian session forex traders caught up to the late U.S. session dollar rally from last Friday.

EUR/USD went up to 1.2053 before falling back to 1.2033;
GBP/USD shot up to 1.3587 before slipping to 1.3569;
USD/JPY climbed 6 pips (+0.05%) to 113.18, and
USD/CHF inched 4 pips (+0.04%) to .9753.

AUD

There weren’t a lot of other catalysts during the session, so Asian session traders focused on pricing in Australia’s report about possible decreases in iron ore prices. Not surprisingly, traders took it out on the Aussie.

AUD/USD is down by 11 pips (-0.14%) to .7854,
AUD/JPY is down by 10 pips (-0.11%) to 88.86,
AUD/CAD is down by 28 pips (-0.29%) to .9733, and
AUD/NZD is down by 46 pips (-0.42%) to 1.0935.

Watch Out For:

  • 7:00 am GMT: Germany’s factory orders (0.1% expected, 0.5% previous)
  • 8:15 am GMT: Switzerland’s CPI (-0.1% expected and previous)
  • 8:30 am GMT: U.K.’s Halifax house price index (0.2% expected, 0.5% previous)
  • 9:30 am GMT: Euro Zone’s Sentix investor confidence (31.5 expected, 31.1 previous)
  • 10:00 am GMT: Euro Zone retail sales (1.4% expected, -1.1% previous)