Market Drivers for December 10, 2013
- Yen crosses hit highs not seen since 2008
- UK Trade bit wider than expected IP up
- Nikkei -0.25% Europe .06%
- Oil $97/bbl
- Gold $1243/oz.
Europe and Asia
CNY: IP 10% s. 10.2% Retail Sales 13.7% vs.13.2%
EUR: French IP -0.3% vs. 0.1%
GBP: UK Trade -9.7B vs. -9.3B
GBP: UK IP 0.4% vs. 0.3%
North America
USD: JOLTS 10:00
USD: Wholesale Inventories 10:00
In what is yet another sign that global markets may have put the ghosts of the 2008 credit crunch to rest, the yen crosses reached their highest levels in more than 5 years with EUR/JPY running through the 142.00 level while GBP/JPY crossed the key 170.00 mark. With little economic data on the calendar, most of the trade was driven by technical rather than fundamental factors but it nevertheless expressed a key upturn in risk appetite by currency investors.
On the economic docket the market saw the latest release of Chinese data including Industrial Production, Investment and Retail Sales data. Overall the results were mixed with IP coming in at 10.0% versus 10.2% eyed, Fixed Asset Investment at 19.2% versus 20.1% expected but Retail Sales rising to 13.7% from 13.2% projected. The Chinese economy appears to be trying to make a transition from investment led to consumer led demand, but the process is very slow and gradual.
The Aussie saw little reaction to the news, but the pair remained well supported at the 9100 level, trading quietly ahead of tomorrow’s key employment report. If the data shows a significant contraction in labor demand, it will no doubt raise fears of yet another RBA rate cut and put further pressure on the unit.
In Europe, the newsflow was also muted, with investors seeing divergent data from France and Italy. French Industrial Production saw yet another miss, contracting -0.3% versus 0.1% eyed while Italy saw a strong rebound with IP rising to 0.5% versus 0.3% projected. Overall the pace of economic activity remains uneven in the region but that has not affected investor enthusiasm for the EUR/USD which remained near session highs at 1.3750 as traders continue to be on a recovery in the eurozone.
In North America today the calendar is quiet as well with only Wholesale Inventories and JOLTS on the docket leaving currency markets to look to equities for direction. So far, the appetite for risk has remained relatively strong and yen crosses continue to be well bid. USD/JPY has struggled with the 103.30 level which has attracted sellers every time the pair approached that barrier, but if the pair can clear that level and push through 103.50 it can quickly rise towards 104.00 as short covering kicks in and drags all the yen crosses to fresh multi year highs.