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Daily FX
Euro and Pound Maintain Strength, Yen Flounders
Tuesday November 28, 5:06 am ET
By Boris Schlossberg, Senior Currency Strategist [email protected]
• JPY Retail misses once more
• GBP up on M&A activity
• EUR lifted by M3 data, sedate FinMins
• USD Durable Goods and housing on tap
Japanese retail sales disappointed once again printing -0.2% versus 0.7% expected indicating that consumer spending remains a sore spot for the Japanese economy. Some analysts suggested that sales for clothing were depressed by unnaturally warm weather in October much as sales in the summer were hurt by unseasonable amounts of rain. Those explanations, however, can not account for meager 0.1% gain in year over year sales. Japanese economic performance continues to show strong corporate growth and stagnant consumer demand. Such combination of offsetting factors is unlikely to generate any speedy action from the BoJ on interest rates, as the central bank remains a cautious observer until it sees evidence of sustained consumer spending.
The net result of this dynamic is that speculators continued to plow into the carry traders with EUR/JPY and GBP/JPY hitting fresh highs. EUR/JPY especially was the star of the night with the pair hitting all time highs within 3 points of the 153.00 figure. The euro itself was boosted by relatively laissez-faire commentary from several Eurozone fiscal authorities including Eurogroup head Jean- Claude Juncker who noted that the higher euro “will be a concern at some point” but that that point has not yet been reached. The relaxed attitude of Mr Juncker was surprising given euro’s lofty levels and indicates the confidence of EZ policy makers regarding the region’s ability to generate organic growth despite the competitive problems for it export sector. The market interpreted the rhetoric to mean that for now ECB will not face any pressure to moderate its hawkish posture and the EUR/USD remained bid all night long.
With US finally back to work after a holiday week, the American calendar is full of important economic data including Durable Goods, Consumer Confidence and housing stats. As we noted in our weekly momentum rules the day, and if US data disappoints 1.3300 on the EUR/USD and 1.9500 on GBP/USD could well be within reach by end of day. However, given the greenback’s highly oversold condition any positive surprise could easily trigger some quick and vicious profit taking as dealers will be eager to take back some of the euro shorts they printed last week.
Euro and Pound Maintain Strength, Yen Flounders
Tuesday November 28, 5:06 am ET
By Boris Schlossberg, Senior Currency Strategist [email protected]
• JPY Retail misses once more
• GBP up on M&A activity
• EUR lifted by M3 data, sedate FinMins
• USD Durable Goods and housing on tap
Japanese retail sales disappointed once again printing -0.2% versus 0.7% expected indicating that consumer spending remains a sore spot for the Japanese economy. Some analysts suggested that sales for clothing were depressed by unnaturally warm weather in October much as sales in the summer were hurt by unseasonable amounts of rain. Those explanations, however, can not account for meager 0.1% gain in year over year sales. Japanese economic performance continues to show strong corporate growth and stagnant consumer demand. Such combination of offsetting factors is unlikely to generate any speedy action from the BoJ on interest rates, as the central bank remains a cautious observer until it sees evidence of sustained consumer spending.
The net result of this dynamic is that speculators continued to plow into the carry traders with EUR/JPY and GBP/JPY hitting fresh highs. EUR/JPY especially was the star of the night with the pair hitting all time highs within 3 points of the 153.00 figure. The euro itself was boosted by relatively laissez-faire commentary from several Eurozone fiscal authorities including Eurogroup head Jean- Claude Juncker who noted that the higher euro “will be a concern at some point” but that that point has not yet been reached. The relaxed attitude of Mr Juncker was surprising given euro’s lofty levels and indicates the confidence of EZ policy makers regarding the region’s ability to generate organic growth despite the competitive problems for it export sector. The market interpreted the rhetoric to mean that for now ECB will not face any pressure to moderate its hawkish posture and the EUR/USD remained bid all night long.
With US finally back to work after a holiday week, the American calendar is full of important economic data including Durable Goods, Consumer Confidence and housing stats. As we noted in our weekly momentum rules the day, and if US data disappoints 1.3300 on the EUR/USD and 1.9500 on GBP/USD could well be within reach by end of day. However, given the greenback’s highly oversold condition any positive surprise could easily trigger some quick and vicious profit taking as dealers will be eager to take back some of the euro shorts they printed last week.
