USD - United States Dollar
The U.S. dollar is erasing some losses after critical economic data was released: the Philadelphia Fed Business Outlook came in at 17 versus the 3.8 expected; retail sales numbers month to month came in at 3 percent, as expected; retail sales ex-auto numbers came in at 0.7 percent, which was higher than expected; and, unemployment claims came in lower than anticipated at 204 k, which is positive for the US dollar (i.e. because the actual numbers are below the forecast).
According to Bloomberg Economics, layoffs continue to be low, with jobless claims dropping, and the number of unemployed are declining modestly, which is implying tight labour-market conditions. Bloomberg anticipates the pace of hiring to moderate in 2020 along with GDP growth, but job creation should be sufficiently strong to push the unemployment rate lower to 3.3 percent by year-end.
On the flip side, contrasting the positive information above, one of the catalysts for the weak U.S. dollar performance yesterday and in the overnight trading session was the release of the Beige Book (released by the Fed’s 12 district banks ). The Beige Book reported job cuts or reduced hiring among manufacturers, and it also reported that there were scattered job cuts in the transportation and energy sectors.
There were good market news that came from the U.S. China sign phase one trade deal. President Trump emphasized that this deal has “total and full enforceability.” Some key points that are directly related to the FX market are the following:
• China and the U.S. agreed to refrain from competitive FX devaluation, with the IMF becoming involved if FX issues are unresolved.
• China will communicate regularly and consult on FX markets; at the same time, U.S. and China agree to honour the G-20 FX communique commitments.
• U.S. and China agree to respect one another’s monetary policy autonomy, and U.S-China FX issues are to be referred to as a bilateral arrangement.
The Japanese Yen depreciated to an eight-month low versus the U.S. dollar, despite the Greenback’s weakness. The Japanese Yen is trading above the 110 level, at 110.03 at the time of this writing. The following critical resistance level might be 110.53.
The Chinese offshore Yuan appreciates to 0.26 percent at the time of this writing, and the USD/CNH pair trades at 6.8755 following the signing of the U.S.-China trade deal.
The South African Reserve Bank cut its benchmark interest rate to 6.25 percent from 6.5 percent for the first time since July as inflation is forecasted to stay within the target, and the economy is growing slowly. The South African dollar depreciates 0.21 percent at this moment versus the Greenback.
1.3038 - 1.3062 ▲EUR/USD:
1.1122 - 1.1144 ▼GBP/USD:
1.3030 - 1.3081 ▼AUD/USD:
0.6875 - 0.6922 ▼NZD/USD:
0.6625 - 0.6650 ▼