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Forex today: euro took the limelight, two-way business in mixed risk sentiment

Forex today maintained an air of caution with long-term yields dropping again and the S&P 500 -0.56%. 

Key data had US November NY Fed manufacturing, 19.40, 26.00 Rtrs f/c, 30.20 previous, US October Core CPI m/m SA, 0.2%, 0.2% Rtrs f/c, 0.1% prev , US October Core CPI y/y NSA, 1.8%, 1.7% Rtrs f/c, 1.7% previous, US October CPI m/m SA, 0.1%, 0.1% Rtrs f/c, 0.5% previous  and US October CPI y/y NSA, 2.0%, 2.0% Rtrs f/c, 2.2% previous. Fed's Evans hit the wires saying that he will go into December meeting with an open mind while noting that Central banks can't fight a rise in asset prices explicitly. 

The greenback was trying to recover from 93.40 after a poor day overnight in European trade where it lost -0.32%. EUR/USD rebounding sharply in European trade looking for a score at fresh 2017 highs onto the 1.21 handle should it manage a climb back into the aug/Sep congested area up ahead. In NY, EUR/USD picked up a safe haven bid to 1.1860 early doors but once the US data was digested, risk sentiment improved, US yields rallied and the DXY recovered to more respectable levels at 93.88 the recovery high before leaning on 93.78/80 support area again. EUR/USD moved back to hourly support in the 1.1785/90 area before picking up a late bid back onto the  1.18 handle ending pretty much flat for the NY session making for a gravestone doji in the daily sticks while the gains into the daily cloud were unsustainable. Looking ahead, there will be a full house voting on tax reform on Thursday, but before that event, we have EZ's October inflation final and then the US weekly claims data.

GBP/USD was supported by a hawkish BOE’s Broadbent, but not enough to keep the bears away at 1.3180 resistance where all bullish attempts to pare back the slide in London from 1.32 were faded. GBP/USD ranged in 30 pips range between there and 1.3155 lows for the NY session. There was a disappointing 14k drop in Sep employment, (the first drop since last Oct) in UK data although wage data showed average weekly earnings up 2.2%; that was a little better than expected while the unemployment rate remained unchanged at 4.3%. The cross was better bid and looked poised to break higher as it probes key technical levels including the upper 30-D Bollinger and the daily Ichi cloud top at 0.9019 and 0.9027 respectively. Fundamentals are supporting the cross in the divergence of economic performances between the EZ and UK and while Brexit negotiations remain deadlocked on fragile political grounds in the Uk parliament. 

Elsewhere, USD/JPY dropped from 113.20 to 112.48 (to score a fresh a one-month low) but later pared back the losses as risk sentiment improved towards the close, (however, US benchmarks finished in the red again, S&P 500 -0.56%, DJIA -58% and NASDAQ - 0.60% ). CAD was lower after oil down for the second day, although BoC's No2 on Bloomberg made hawkish comments, supporting the Loonie into the close to 1.2756 post comments. As for the antipodeans, AUD/USD stabilised after the wage data disappointment but could not recover losses and pitched a fresh five-month low down at 0.7573. The Kiwi was more valiant, bouncing to 0.6920 but dropped back to an unchanged position for the session down at 0.6875.

Key events ahead

Analysts at Westpac offered their outlook for today's key events in Asia as follows: "NZ: consumer confidence (ANZ) faltered in Oct. near multi-year highs. This month’s reading will be interesting, capturing the announcement of the new government. Australia: Oct employment is expected to increase by 18k, with the unemployment rate flat at 5.5%. Westpac’s forecasts are broadly in line, +20k and 5.5%. Oct’s gain would be the 13th consecutive monthly gain in employment with leading indicators still looking very solid."

 Key notes

  • Republican Sen. Ron Johnson opposes GOP Senate tax package - WSJ
  • BoC’s No2, Wilkins making comments on Bloomberg TV: "BoC To be cautious on tightening"
  • Bitcoin gains more than 10% and surges above $7000
  • US Pres. Trump: Slogan for Asia trip is ‘fair & reciprocal trade’
  • Republican Sen. Ron Johnson opposes GOP Senate tax package - WSJ
  • US House Ways & Means Chair Brady: Strong support for Obamacare mandate repeal in tax bill
  • US: Retail sales eased in October but remained solid - Wells Fargo
  • Gold eases below $1280 as DXY turns positive on the day
  • Atlanta GDPNow for 4Q comes in at 3.2% vs. 3.3% last
  • US CPI: Soft headline, but core inflation is strengthening - Wells Fargo
  • WTI challenges $55.00 post-EIA

 

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