MAJOR HEADLINES – PREVIOUS SESSION
* US Weekly Initial Jobless Claims out at 482k vs. 440k expected and revised 446k prior
* US Continuing Claims out at 4599k vs. 4598k expected and revised 4617k prior
* US Jan. Philly Fed Index out at 15.2 vs. 18.0 expected and revised 22.5 prior
* US Dec. Leading Indicators out at 1.1% vs. 0.7% expected and revised 1.0% prior
* AU Q4 Export Price Index out at -1.7% q/q vs. -3.5% expected and -9.6% prior
* AU Q4 Import Price Index out at -4.3% q/q vs. -2.0% expected and -3.0% prior
* JP Nov. All Industry Activity Index out at +0.1% m/m, as expected, vs. revised +1.1% prior
* JP Dec. Nationwide Dept. Store Sales out at -5.0% y/y vs. -11.8% prior
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
* UK Retail Sales (0930)
* EU Industrial New Orders (1000)
* EU ECB’s Gonzalez-Paramo to speak (1200)
* CA Retail Sales (1330)
Risk aversion hit markets big time midway through the US morning yesterday as markets reacted to US Pres. Obama’s speech in which he outlined plans to limit the size of banks and the share of funding that can come from non-deposit sources while also declaring that commercial banking and proprietary trading activities would be segregated in the future. While it is noted that such moves would require legislation and may take years to implement, the damage was done and banking stocks went down by the lift shaft with a broader drag on equity markets.
This fed into general risk aversion to the benefit of the JPY and CHF and to a lesser extent the greenback. USDJPY was under additional pressure as US yields dipped 5-6bp lower while EURJPY wallowed at 6-mth lows. Commodities were also hit hard amid general risk aversion and news that Australian miners may face a larger tax bill on their profits in future. Gold hit new lows since the beginning of the year below 1,100 and AUD had a brief peep below 0.90.
In all the panic, economic data was generally ignored: US jobless claims worse than expected at 482k vs. 446k last and 440k expected while the Philly Fed Index was a weak 15.2 from 22.5 last and 18.0 f/c though the No. of Employees sub-index showed some improvement to 6.1 from 4.5 in December and -2.2 in November. New orders was a disappointing 3.2 compared to 8.3 the previous month. On the plus side, leading indicators rallied 1.1% from a revised 1.0% previously. The BOC was a touch more upbeat in its MPR than players had been expecting, noting the economy is on track to recover this year with the outlook improving since October.
Weak Asian bourses kept riskier currency pairs on the defensive throughout the Asian session though mild profit-taking dragged them off the lows near lunchtime. Price action was volatile and the fact that decent two-way business was reported in either direction suggests Asia is undecided. With 200-day Moving Averages in vogue recently it was interesting to see the USD Index broke above this average yesterday (78.545) but lacked follow-through so far today in Asia, adding to the uncertain trend.
Retail sales populate the data slate today with those from the UK for December on tap. While not seen as reliable as the BRC equivalent, a number above the expected +1.1% m/m on better Christmas shopping may provide some comfort for GBP after its recent slide from popularity. EU industrial orders are also on tap in Europe while a rather stale Canada retail sales number for November is the only releases in North America.
It might be a volatile end to the week so enjoy the weekend later.
Written by Finexo.com