- French final HICP m/m: unchanged at 0.0% as expected
- French final HICP y/y: unchanged at 0.7% as expected
- U.K. jobless rate: steady at 4.8% as expected
- U.K. claimant count change: 2.4K vs. 6.5K expected, 13.3K previous
- U.K. average earning index (no bonus): 2.6% vs. 2.5% expected vs. 2.4% previous
- U.K. average earning index (w/ bonus): 2.5% vs. 2.3% expected, 2.4% previous
- Swiss ZEW survey: 12.9 vs. 8.9 previous
- Euro Zone industrial production m/m: -0.1% vs. 0.1% expected, -0.9% previous
- Euro Zone industrial production y/y: 0.6% vs. 0.8% expected, 1.3% previous
- U.S. retail sales report coming up
- FOMC rate decision and presser later
Most pairs have been milling about in tight ranges all day, likely because forex traders were sitting on their hands ahead of the last FOMC statement of the year. Still, there were some movements, albeit rather wonky and choppy ones.
Pre-FOMC skittishness – Forex traders tend to behave themselves ahead of top-tier events like the upcoming FOMC rate decision and presser, resulting in lower volatility and poorly defined directional movement. And today was certainly a very normal day, since most pairs had rather choppy price action and volatility was more subdued than usual.
By the way, make sure to read up on Forex Gump’s trading guide on the FOMC statement, if you haven’t already. You can read it here.
U.K. jobs report – According to the ONS, the U.K.’s jobless rate held steady at 4.8% during the three months to October. This is great news because that’s the lowest reading since the three months to September 2005. And the steady jobless rate looks healthy, too, since the employment rate also held steady at 74.5%, which is an all-time high.
Even better, the number of people claiming unemployment-related benefits in November came in at 2.4K. This is fewer than the expected 6.5K, as well as the previous month’s 13.3K.
Regarding wages, nominal average weekly earnings increased by 2.8% year-on-year during the month of October, with a three-month average of 2.5%. The three-month average is better than the consensus that it would increase at 2.3%, which is slower than the previous three-month period’s 2.4%.
However, the faster increase in wages was due to the 7.1% jump in bonuses. If bonuses are stripped, then nominal average weekly earnings only grew by 2.6%, with a three-month average of also 2.6%. This is a tick faster than the 2.5$ consensus and faster than the previous three-month period’s 2.4% increase.
Risk aversion returns – After a brief stay, risk appetite got booted out the door and risk aversion returned, sending most of the major European equity indices lower.
- The pan-European FTSEurofirst 300 was down by 0.31% to 1,408.99
- The blue-chip Euro Stoxx 50 was down by 0.40% to 3,226.50
- Germany’s DAX was down by 0.29% to 11,262.50
- The U.K.’s FTSE 100 was down by 0.12% to 6,960.00
Aside from skittishness ahead of the FOMC statement, market analysts blamed the risk-off vibes on bad news for healthcare companies and yesterday’s news that the ECB rejected Monte dei Paschi’s request for an extension to raising the €5 billion needed at the end of the month.
Major Market Movers:
EUR – There weren’t really any catalysts, but the euro dropped when the morning London session opened. However, it’s possible that European forex traders were trying to price in the news from earlier that the ECB rejected Monte dei Paschi’s request for an extension. Anyhow, the euro then spent the rest of the session b clawing its way higher after the initial drop. The damage was done, though, and so the euro ended up as the weakest currency of the session.
EUR/USD was down by 8 pips (-0.08%) to 1.0641 with 1.0612 as session low, EUR/CHF was down by 24 pips (-0.22%) to 1.0747 with 1.0739 as session low, EUR/CAD was down by 24 pips (-0.17%) to 1.3942 with 1.3924 as session low
GBP – The pound’s price action was really wonky during the morning London session. The pound started the session by showing signs of strength before turning tail shortly after the net positive jobs report was released. After that, the pound spent the rest of the session by sinking lower before popping higher near the end. And did I mention there were no apparent catalysts?
GBP/USD was up by 13 pips (+0.11%) to 1.2679 with 1.2635 as session low, GBP/JPY was up by 20 pips (+0.14%) to 145.84 with 145.20 as session low, GBP/NZD was up by 15 pips (+0.08%) to 1.7561 with 1.7480 as session low
USD – The Greenback has been steadily sliding lower against most its peers during the earlier Asian session. Well, that slide continued into the morning London session, likely because of preemptive positioning or unwinding ahead of the FOMC statement and presser for later.
USD/CHF was down by 16 pips (-0.16%) to 1.0098, USD/CAD was down by 13 pips (-0.10%) to 1.3102, USD/JPY was down by 11 pips (-0.10%) to 115.01
- 1:30 pm GMT: Headline (0.2% expected, -0.2% previous) and core (0.1% expected, 0.0% previous) readings for U.S. PPI
- 1:30 pm GMT: Headline (0.3% expected, 0.8% previous) and core (0.4% expected, 0.8% previous) readings for U.S. retail sales
- 2:15 pm GMT: U.S. capacity utilization (75.1% expected, 75.3% previous)
- 2:15 pm GMT: U.S. industrial production (-0.3% expected, 0.0% previous)
- 7:00 pm GMT: FOMC monetary policy decision (rate hike from 0.50% to 0.75% expected)
- 7:30 pm GMT: FOMC press conference
- 9:30 pm GMT: Business NZ manufacturing index (55.2 previous)
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!