Market Drivers for November 16, 2017
Europe and Asia
AUD: AU Employment 3.7K vs. 17.5K
GBP: UK Retail Sales 0.3% vs. 0.1%
North America
USD: Weekly Jobless 8:30
USD: Philly Fed 8:30
It’s been a relatively quiet night of trade with most of the majors stuck in 30 pips ranges, but both cable and the Aussie saw steady bids on slightly better than expected data while the euro continued to sell off throughout the early European day.
In Australia the headline employment data came in slightly softer at 3.7K versus 17.5K eyed, but the headline number hid the underlying strength as full-time employment expanded at better than 24K rate. The unemployment rate also dipped to 5.4% but that was the result of weaker participation rate.
Overall the jobs data in Australia showed that labor demand in the region remains relatively robust, but has yet to translate into any meaningful wage growth, That in turn is likely to keep RBA in a firmly neutral mode for the time being and keep Aussie steadily underpinned at the .7500 figure unless US rates begin a meaningful climb higher and the 10-year yield rises above the 2.50% level. The Aussie bounced a bit higher on the news but has been essentially unmoved near the .7600 level for most of the night.
In the UK, the Retail Sales data came in at 0.3% versus 0.1% and was lower on a year-over-year basis as it suffered from some very stiff comparisons to a year earlier. Still, with rumors circulating that UK Retail Sales may be horrid, the small beat of expectations was seen as a relief and cable bounced higher towards the 1.3200 level boosted by EURGBP flows which sold off all night long.
In the US session the calendar only carries second-tier data with Philly Fed the only report of note. Yesterday’s miss in Empire Manufacturing suggests that Philly could be soft as well.
The market’s attention will be taken up with Washington DC rather than Wall Street as lawmakers work on the Tax Reform bill. The House will vote on the legislation today and vote will be watched closely for its total tally. The bill faces an uphill battle in the Senate and if it can’t get strong support in the House, markets could quickly sour on the dollar as the day proceeds.