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London Session Wrap-up

  • Data from euro zone, U.K., and Switzerland disappoint
  • October NFP shows 204K rise in hiring, better than expected 121K
  • Canadian jobs report to show increase in unemployment from 6.9% to 7.0%

Today’s London session was still marked by plenty of sideways movement, with USD/JPY holding on to the 98.00 handle and EUR/USD hovering above 1.3400. Traders are waiting to see the results of the October NFP report, which is projected to reflect the impact of the recent government shutdown on jobs growth. A 121K reading is eyed while the jobless rate is likely to climb from 7.2% to 7.3%, but better than expected figures might provide support for the Greenback.

A few hours ago, Europe printed mostly weaker than expected data, as French industrial production and trade balance fell short of consensus. The U.K. also released a disappointing trade deficit of 9.8 billion GBP, wider than the estimated 9.1 billion GBP and the previous 9.6 billion GBP shortfall. Swiss retail sales printed a bleak 1.0% reading, much lower than the estimated 2.6% annual increase.

Also due in today’s U.S. session is the Canadian jobs report, which is expected to print a 12.7K rise in hiring and an uptick in the unemployment rate from 6.9% to 7.0% for October. Later on, the U.S. will report its preliminary UoM consumer sentiment figure for November and possibly show an improvement from 73.2 to 74.6, which might be positive for the U.S. dollar.

Asian Session Wrap-up

  • Chinese trade surplus at $31.10 billion vs. $23.5 billion forecast
  • RBA downgrades 2014 GDP forecast to 2.5%, can cut rates again if needed
  • Swiss retail sales, medium-tier euro zone and U.K. data coming up

Consolidation was the name of the game for today’s Asian trading session, as EUR/USD settled around the 1.3400 handle while AUD/USD held above .9450. While most dollar pairs moved sideways for the past few hours, yen pairs chalked up small gains. AUD/JPY pulled up to a high of 93.14 while GBP/JPY retraced above the 158.00 mark. Better than expected trade data from China kept risk aversion at bay and provided support for higher-yielding currencies.

In today’s London session, brace yourselves for a set of medium-tier data from the U.K. and the euro zone. German trade balance and French industrial production are both expected to show small improvements which might keep the euro afloat while the U.K. could print a narrower trade deficit of 9.1 billion GBP compared to the previous 9.6 billion GBP shortfall.

Swiss retail sales data is also due today and an improvement from the annual reading of 2.4% to 2.6% is projected for September, which might push USD/CHF deeper below .9200. Unless these releases come in significantly above or below expectations, major currency pairs could keep moving sideways as traders await the NFP release much later on.

U.S. Session Wrap-up

  • U.S. Advanced GDP at 2.8% vs. 2.0% estimate
  • Draghi says ECB still has more policy tools in its arsenal
  • No surprises from Fed officials Dudley and Stein

After its sharp selloff when the ECB cut rates, EUR/USD slipped lower to the 1.3300 handle when the U.S. GDP release printed a stronger than expected reading of 2.8%. This was enough to push USD/JPY past the 99.00 major psychological handle to a high of 99.42, before the pair quickly retreated back below 98.00 when traders realized the underlying components of the U.S. GDP weren’t so impressive.

Draghi’s comments during the ECB press conference also dragged the euro a little lower, as he reiterated that the central bank still has plenty of other easing tools to use if necessary. He also mentioned that the euro region is expected to undergo a longer period of low inflation and that economic risks remain to the downside.

Fresh off the press is the RBA monetary policy meeting minutes, which revealed that central bank officials are expecting weaker growth in 2014 due to declining mining investment. This could weigh on Aussie pairs in today’s Asian session, as AUD/USD tests support at .9450 while AUD/JPY dips below 93.00.

Up ahead, the Chinese trade balance release could keep the Aussie’s losses in check if the actual figure shows the expected 23.5 billion USD surplus, higher than the previous 15.2 billion USD surplus in September.

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