Article Highlights

  • U.S. headline durable goods orders down by 5.1% vs. -0.6% expected
  • U.S. core durable goods orders down by 1.2% vs. -0.1% expected
  • U.S. pending home sales up by 0.1% vs. 1.0% expected
  • U.S. initial jobless claims at 278K vs. 281K expected, 294K previous
  • Japanese household spending down by 4.4% y/y vs. -2.3% forecast
  • Tokyo core CPI down by 0.1% vs. expected 0.1% increase
  • Japanese preliminary industrial production lower by 1.4% vs. -0.3% expected
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I’m seeing red! The latest set of economic figures from the U.S. and Japan came in mostly weaker than expected, but risk appetite managed to stay in the forex market.

Major Events:

Weak U.S. data – The durable goods orders report turned out to be a huge disappointment, as both the headline and core readings came in way below expectations. The former indicated a 5.1% slump versus the projected 0.6% drop while the latter showed a 1.2% decline instead of the estimated 0.1% dip.

Pending home sales also fell short with a meager 0.1% uptick instead of the projected 1.0% climb. On a less downbeat note, initial jobless claims landed at 278K, lower than the 281K consensus and the previous 294K reading.

Weak Japanese data – Japan printed more than its fair share of downbeat reports, setting the stage for a potentially dovish BOJ statement. Household spending plummeted by 4.4% year-over-year in December while the Tokyo core CPI logged in a 0.1% drop in price levels instead of the estimated 0.1% increase.

To top it off, the preliminary industrial production reading showed a 1.4% decline, worse than the estimated 0.3% drop. Meanwhile, the national core CPI came in line with expectations of a 0.1% uptick while the unemployment rate held steady at 3.3% as expected.

OPEC ready to cut production? – Word through the oil pipeline is that OPEC members are starting to warm up to the idea of reducing their production levels in order to boost prices. According to the Russian oil minister, Saudi came up with a proposal for each country to trim production by 5% but a senior OPEC official said that these were nothing but rumors.

Crude oil surged close to $35/barrel upon seeing these headlines but quickly slumped below $33/barrel on the lack of confirmation. As for Iran, the country remained eager to regain its lost market share before the Western sanctions were lifted earlier this year. Duhn duhn duhn…

Major Currency Movers:

CAD– The oil-related Loonie was one of the first ones to party upon hearing these rumors of a potential OPEC cut.

USD/CAD dipped to a low of 1.3949 but spiked right back up to 1.4050, CAD/JPY jumped to a high of 85.32 then retreated to 84.49, and EUR/CAD fell to a low of 1.5219 then recovered to a high of 1.5438.

USD & JPY– Weaker than expected economic figures dragged these safe-haven currencies lower against their forex peers.

EUR/USD popped up to a high of 1.0970, USD/CHF retreated to a low of 1.0130, and AUD/USD climbed up to test the .7100 major psychological mark. USD/JPY is treading slightly higher around 118.75, EUR/JPY is edging close to the 130.00 handle, and GBP/JPY is consolidating above 170.50.

Watch Out For:

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Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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