JPY Strengthens
Ahead Of ADP and FOMC Minutes
USD and JPY
gain; UK construction sector contracted; German unemployment rose less than
expected; Swiss KOF declined but PMI rose. Market turns to ADP, jobless claims
and the latest FOMC minutes.
Despite the strong
rally in US equities yesterday, the optimism from the fiscal cliff deal
disappeared and risk aversion returned to markets during Asia. USD and JPY
buying intensified during the London session, European equities declined over
0.5% and JPY pairs broke sharply lower.
UK construction
sector remained in contraction in December as the PMI index deteriorated to a
six month low at 48.7 from prior 49.3. The housing activity declined at the
fastest pace in two years and total new business fell at an accelerated pace.
GBPUSD weakened to 1.6170 but EURGBP remained steady around 0.81.
German
unemployment positively surprised as it rose only 3K in December, which is less
than the market anticipated. The unemployment rate remained steady at 6.9%. Nevertheless,
EURUSD declined to below 1.32.
Swiss KOF
economic barometer declined in December to 1.28 from previous 1.5 but SVME PMI
was above expectations at 49.5 from prior 48.5.
The US session
begins at 8:15 am ET with the ADP report that is expected to rise in December
to 134K from prior 118K. Jobless claims at 8:30 am are seen higher at 356K from
previous 350K.
The key event
will be the release of the latest FOMC minutes at 2:00 pm. The decision to
announce QE4 seems to imply that the commission is more concerned about the
labor market than price stability so it will be interesting to read details of
the discussion that led to the decision.
Patrik Urban
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