Dollar Dips in Thin, Holiday Trade, AUD Breaks Higher

USD/JPY Edges Up, Japan Jobless Rate Unchanged

Summary:

The Dollar Index (USD/DXY), a popular measure of the Greenback’s value against a basket of 6 major currencies, dipped to 101.45, from 101.70, and its lowest finish since 27 July.

The USD/JPY pair, however, edged higher to 142.45 (142.35) after Japan’s November Jobless Rate remained unchanged, at 2.5%. The Dollar traded to an overnight high at 142.67 JPY before easing.

The Australian Dollar (AUD/USD) broke above the 0.68 cent resistance level to 0.6822 at the close of trade in New York. New Zealand’s Kiwi (NZD/USD) extended its climb above 0.63 cents to close at 0.6330 (0.6285).

Sterling (GBP/USD) climbed above 1.2700 to finish at 1.2722 (1.2685). UK November Retail Sales rose 1.3%, higher than median expectations at 0.4%. October UK Sales was revised up to 0% (from -0.3%).

The Euro (EUR/USD) rallied 0.23% to 1.1043, a 4-month high, against 1.0997 previously. Broad-based US Dollar weakness boosted the shared currency.

Wall Street Stocks rallied. The US S&P 500 broke higher to within 0.5% of its all-time high at 4,785 (4,755 previously). Other global equity markets were mixed.

Global bond yields were little-changed. The US 10-year treasury yield was unchanged at 3.89%. The two-year US bond rate climbed to 4.34%, up two basis points from its previous finish.

Data released Friday saw the US November PCE (Personal Consumption Expenditure) Price Index dip to 0.1%, lower than forecasts at 0.2%. October’s Core PCE was revised lower to 0.1%.

In limited data released, US November Durable Goods Orders climbed 5.4% (m/m), up from -5.1% previously, beating estimates at 2.4%. November New Home Sales though fell to 590K from 672K.

• USD/JPY – The US Dollar kept its bid, finishing 0.15% higher to 142.45 (142.25). In thin, choppy trade, the Greenback traded to an overnight hihg at 142.67. The overnight low recorded was at 142.09.
• AUD/USD – The Aussie Battler soared against the Greenback, climbing above the 0.68 cent level to 0.6822 at the New York close. The Australian Dollar traded to an overnigth peak at 0.6827 while the overnight low recorded was at 0.6797.
• EUR/USD – The shared currency benefited from a lower US Dollar, edging higher to 1.1043, four-month highs. The Euro saw an overnight high at 1.1045 before settling to its New York close. The overnight low traded was at 1.1009.
• GBP/USD – Sterling rallied against the broadly based weaker Greenback to 1.2722, up from 1.2685 previously. The British currency traded to an overnight high at 1.2721 while the overnight low recorded was 1.2684.

On the Lookout:

Expect trading to remain thin with volumes low amids a holiday-affected week. Data releases scheduled today kick off with Japan’s BOJ Summary of Opinions (the Bank of Japan’s projection for inflation and economic growth), Japanese November Annual Housing Starts (y/y f/c -4.3% from -6.3% - ACY Finlogix), and Japanese November Construction Orders (y/y f/c  -4.3% from -6.3% - ACY Finlogix). China releases its November Industrial Profits (y/y f/c -6% from -7.8% - ACY Finlogix). Switzerland releases its Swiss December Economic Index (f/c -26 from -29.6 – ACY Finlogix).

The US rounds up today’s data releases with its Richmond Fed Manufacturing Index (f/c -6 from -5 – ACY Finlogix) and US Dallas Fed Services Index (f/c -11.5 from -11.6 – ACY Finlogix).

Trading Perspective:

The US Dollar continued to edge lower in thin volume in thin holiday affected trade. Expect more of the same today, although the US currency should stabilise at current levels. The risk is for a rebound in the Greenback, which should rally to a better finish.

• USD/JPY – Look for immediate support for the Greenback at 142.30 followed by 142.00 (overnight low traded was 142.09). Immediate resistance can be found at 142.70 (overnight high traded was 142.67). The next resistance level lies at 143.00. Expect more choppy trade today in a likely range of 142.00 – 143.00. Prefer to buy USD/JPY dips.

(Source: Finlogix.com)

• AUD/USD – The Aussie Battler extended its advance against the Greenback, soaring to an overnight high at 0.6827 before closing at 0.6822. Look for immediate resistance at 0.6840 followed by 0.6870. Immediate support can be found at 0.6790 followed by 0.6760 and 0.6730. Look for consolidation in a likely range of 0.6790-0.6840 today. Trade the range.
• EUR/USD – The Euro settled at 1.1043, 2 pips off its overnight high at 1.1045. Look for immediate resistance today at 1.1045 followed by 1.1070. The next resistance level lies at 1.1100. On the downside, look for immediate support at 1.1010 (overnight low traded was 1.1009). The next support level is found at 1.0980. Look for the Euro to trade a likely range today of 1.1000-70. Prefer to sell rallies.
• GBP/USD – Sterling climbed against the overall weaker US Dollar to 1.2722, up from its previous finish of 1.2685. On the day, look for immediate resistance at 1.2715 (previous high). The next resistance level lies at 1.2730 and 1.2760. Immediate support can be found at 1.2680 and 1.2640 (overnight low traded was 1.2641). Look for Sterling to trade a likely range today of 1.2650-1.2750. Trade the range.

Have a good Wednesday ahead all. Happy trading.

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