Intraday Market Thoughts

Fall Forex Fashion Trends Keep Paying

by Adam Button
Nov 27, 2013 23:17

Yen crosses continued to set fresh highs while US economic data painted a mixed picture. GBP was the top performer while the JPY lagged. Aussie Capex is up next shortly, followed by Japanese retail sales are the top event in the coming hours.

Two main themes in the currency market have developed in the past month 1) yen weakness 2) Australian dollar weakness. They were both on full display Wednesday in what was essentially the final trading day of the month for US markets.

The market didn't get a clear signal from US economic data but it was enough to generally underpin the US dollar. Initial jobless claims, although probably skewed lower by the Veterans Day holiday, were strong at 316K compared to 330K expected. The Chicago PMI was at 63.0 versus the 60.0 consensus.

The main warning sign was in the durable goods report, excluding defense and aircraft orders fell 1.2% compared to a 0.9% forecast rise. It's the third sizeable negative reading in the past four months and sends a poor signal about year end and early 2014.

In any case, the market gravitated to the good news and USD/JPY broke through 102 for the first time since June while EUR/JPY and GBP/JPY hit fresh multi-year highs.

Despite another day of gains in the stock market, the commodity bloc remained under pressure. AUD/USD is in a relentless slump as it hit 0.9068 while USD/CAD broke 1.06.

The pound took out significant support at 1.6270 (the Sept/Oct highs) and hit 1.6325 before eventually settling at 1.6285 in the highest close since 2011.

Other trends that continued Wednesday were oil and gold weakness.

Up later, at 2350 GMT, Japan releases retail sales for October with a 0.8% decline expected. That kind of number will dampen optimism about 2% inflation, which the market has given up on anyway.

Another event on the calendar is 40 minutes later when Australia releases private capital expenditure numbers for the third quarter. Spending is forecast to fall 1.2% in a clear sign of slowing investment.

Finally, at 0130 GMT, China releases October industrial profit data.

GBPUSD and EURUSD premium trades hit their targets, leaving 2 unfilled, while both gold trades from yesterday have been filled and are in progress in our latest Premium Insights.
Act Exp Prev GMT
Retail Trade s.a (OCT) (m/m)
1.8% Nov 27 23:50
Retail Trade (OCT) (y/y)
2.1% 3.1% Nov 27 23:50
Chicago PMI (NOV)
63.0 60.0 65.9 Nov 27 14:45
Nomura/ JMMA PMI Manufacturing (NOV)
54.2 Nov 28 23:13
Core Durable Goods Orders (m/m)
-0.1% 0.5% 0.2% Nov 27 13:30
Durable Goods Orders (m/m)
-2.0% -1.9% 4.1% Nov 27 13:30
Private Capital Expenditure (Q3)
4% Nov 28 0:30

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