Fundamentally speaking there were just a few big economic data scheduled for the past week. The only big economic data was coming from Asia and Australia, and from US we had the retail sales which in November were above expectations coming in at 0.7%, an increase of 0.1% from last reading of 0.6%. Also, this week the US Congress has reached an agreement on the US budget to avoid another government shutdown in January. As usual after this announcement, taper talks hit again the market as the specialists are already calling for an earlier Taper, but in my humble opinion I think we still have to wait longer than expected before FED start cut back their QE stimulus program.
From Europe the only notable thing was Mario Draghi's speech who said governments should focus on: "completing the banking union, implementing growth-friendly fiscal consolidation, and structural reforms in labor and product markets". Also , last week Draghi said that ECB was “technically ready” to cut its deposit rate below zero, which is a big shift in market policy.
China's economic data was also better than expected, exports in November rose 12.7% well above market expectation of 7%. Also the CPI in November rose 3%, down from 3.2% and slightly below the estimate of 3.1%.
In Australia although we had a better than expected increase in job growth that came in at 21.0% from previous low of 10.3%, the unemployment rate picked up speed and increased at 5.8%. But the most notable thing that happened was when RBA's Governor Glenn Stevens surprised markets with some dovish commentary. Governor Stevens suggested that the economy would prefer an exchange rate closer to 0.8500 for AUD/USD.
Aussie plunged 95 pips in just 4 minutes after those market commentary(see Figure 1). Basically this was an aggressive verbal intervention from RBA governor who said that lower aussie is preferable to rates to help the economy.The only reason why he wants lower aussie is so he doesn't need to lower rates again, which are already at historic low point. My personal opinion is that RBA maybe worried that aussie will get to strong with global growth next year. Aussie is down 8 weeks in a row and in the last 20 years AUD/USD has never been down 8 consecutive weeks, maybe this move is overextended and we need some kind of retracement.
Other economic events for the past week was the RBNZ interest rates decision which where kept on hold at 2.5% as per market expectation, but I personally don't trade NZ dollar so much so I wasn't paying to much attention.
Best Regards,
Daytrader21.
From Europe the only notable thing was Mario Draghi's speech who said governments should focus on: "completing the banking union, implementing growth-friendly fiscal consolidation, and structural reforms in labor and product markets". Also , last week Draghi said that ECB was “technically ready” to cut its deposit rate below zero, which is a big shift in market policy.
China's economic data was also better than expected, exports in November rose 12.7% well above market expectation of 7%. Also the CPI in November rose 3%, down from 3.2% and slightly below the estimate of 3.1%.
In Australia although we had a better than expected increase in job growth that came in at 21.0% from previous low of 10.3%, the unemployment rate picked up speed and increased at 5.8%. But the most notable thing that happened was when RBA's Governor Glenn Stevens surprised markets with some dovish commentary. Governor Stevens suggested that the economy would prefer an exchange rate closer to 0.8500 for AUD/USD.
- Figure 1. AUD/USD 1h Chart.
Aussie plunged 95 pips in just 4 minutes after those market commentary(see Figure 1). Basically this was an aggressive verbal intervention from RBA governor who said that lower aussie is preferable to rates to help the economy.The only reason why he wants lower aussie is so he doesn't need to lower rates again, which are already at historic low point. My personal opinion is that RBA maybe worried that aussie will get to strong with global growth next year. Aussie is down 8 weeks in a row and in the last 20 years AUD/USD has never been down 8 consecutive weeks, maybe this move is overextended and we need some kind of retracement.
Other economic events for the past week was the RBNZ interest rates decision which where kept on hold at 2.5% as per market expectation, but I personally don't trade NZ dollar so much so I wasn't paying to much attention.
Best Regards,
Daytrader21.
