David Long

January Market Overview

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Monthly Currency Trading News

$Us Dollar: Dollar rallied at the end of 2015 following the rate rise mid December and FOMC expectations of continuing improvement in the economy. January 2016 started with increased Unemployment Claims and ISM manufacturing and non-manufacturing PMI below expectations. This followed with greatly improved ADP Non-Farm and Non-Farm Employment Change and improved Trade Balance. Unemployment Claims came higher while Unemployment Rate remained low at 5%. Average hourly earnings m/m remained unchanged. Second week brought Crude Oil Inventories below expectations, disappointing Core Retail Sales m/m, PPI m/m and Retail Sales m/m as expected which followed by improved UoM Consumer Confidence. CPI m/m, Core CPI m/m were disappointing while Building Permits and Filly Fed Manufacturing Index came above expectations. The month ended with the increase Crude oil inventories and CB Consumer Confidence, while Unemployment Claims reduced. FOMC decided to keep the rates on hold at 0.5%.  Advanced GDP q/q came improved but below expectations, Core Durable Goods Orders m/m were disappointing.

CNY: The end of 2015 has seen 6% reduction of CNY to $US y/y. The month of January 2016 started with reduced China Manufacturing PMI and disappointing CPI y/y. Second week brought Trade Balance well above expectations. Second half of the month saw reduced GDP Q/Y and Industrial Production y/y.

EurUsd:  Eur remains weak due to QE, Low Interest rates and general weakness in the EU block countries, except Germany.  Second half of the month brought Zew Economic Sentiment well above expectations. Interest Rates remained on hold. The end of the month saw French and German Flash Manufacturing PMI and German Info Business Climate below expectations. The month ended on a positive note with CPI Flash estimate y/y above expectations.

Euro was under pressure at the end of last year which followed by short unexpected rally. This year however, given that there was no major news due to the Christmas holiday Eur has been going sideways, consolidating.


GbpUsd: The year started with Manufacturing, Manufacturing Production m/m and Services PMI  below expectations, Construction PMI above. BOE kept interest rates on hold with an eye on 2% inflation target some time in the future. There is no timetable for the change in interest rates at this point. Claimant Count Change and CPI y/y came above expectations, followed with disappointing Retail Sales and Average Earnings Index 3m/y. The month ended with improved preliminary GDP q/q.


On weakening economic data, uncertainty about EU Exit and the raise in the US$ interest rates GBP plummeted down in the second half of December, reaching the low of 1.4087. Second half of this month has seen some retracement and consolidation.


AudUsd: The month started with disappointing Building Approvals. Retail sales came unchanged as expected which was followed by improved Trade Balance. Both Employment Change and Unemployment Rate as well as CPI q/q came above expectations.


AudUsd has done a full cycle breaking down the wedge and now back up close to retesting 15 year trendline ( in blue) and the all-time 61.8 Fib resistance level.


UsdCad: The month started with improved Trade Balance and Employment change, while Unemployment Rate remained unchanged at 7.1% . Interest rates remained on hold. Second half of the month brought improved Manufacturing Sales m/m and Core Retail Sales m/m while Core CPI m/m came disappointing. The month ended with improved GDP m/m .

UsdCad rallied on the weakness of Oil to 1.4688 breaking long term resistance levels on the way., now retraced back to 50 Fib and 50 EMA.


UsdJpy : JPY has been weak due to the QE and Monetary Policy of BOJ, but second Half of the month has seen it gaining strength due to the Safe Haven money flow and the trouble on the Stock Market. The end of the month has shocked the markets with BOJ pushing the key interest rates into a negative territory ( -0.1%) in its latest attempt to re-inflate the country economy.




Week ahead in the News

USD: ISM Manufacturing and Non-Manufacturing PMI,  ADP Non-Farm Employment Change, Non-Farm Employment Change, Trade Balance, Unemployment Claims, Unemployment Rate.

CNY: Manufacturing PMI, Caixin Manufacturing PMI;   GBP: Manufacturing, Construction and Services PMI, Inflation Report and Official Bank Rate;  AUD: Cash Rate, Building Approvals, Trade Balance, Retail Sales, Monetary Policy; CAD: Trade Balance, Employment Change, Unemployment Rate; NZD: GDT Price Index, Employment Change q/q, Unemployment Rate.


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