Market Drivers for December 12, 2013
Aussie struggles despite improved labor data
EU IP slips -1.1 vs. 0.4% eyed
SNB leaves rates unchanged
Nikkei -1.12% Europe -.31%
Oil $97/bbl
Gold $1244/oz.

Europe and Asia:
AUD Employment 21K vs. 10.3K
AUD Unemployment 5.8% vs. 5.8%
EUR IP -1.1% vs. 0.4%

North America:
USD Retail Sales 8:30
USD Jobless Claims 8:30

A strong jump in Australian jobs report which printed at double the consensus estimates did not provide much help to the Aussie today as the pair remained under pressure in Asian and early European trade today. The Australian employment picture improved markedly as the country generated 21K new jobs in November versus 10K projected.

The underlying data was strong as well with 15K new full time jobs created versus a -31K loss the month prior. The participation rate remained steady at 64.8% and only fly in the ointment was the rise in unemployment to 5.8% versus 5.7% the month before.

Yet despite the rebound in labor conditions, investors remained leery of the Aussie. The pair saw a knee jerk jump on the initial headline to 9080 but macro account quickly sold AUD/USD off the highs and pushed lower for much of the Asian session with the unit coming within 10 points of the 9000 barrier.

At .9000 the Aussie did find a temporary bottom as corporate accounts and option defense traders held the line. The pair has a reported 2 Billion of option related contracts at the 9000 level expiring over the next few days and that could serve to support the unit for now. However, the overall investor sentiment towards the Aussie remains highly negative and if the pair cannot hold above the 9000 level, the shorts are likely to press their trades and push the AUD/USD towards a retest of the yearly lows at 8850 mark.

Elsewhere the price action was relatively subdued with EUR/USD and GBP/USD remaining in tight ranges through Asia and European trade. The euro tried to rally through the 1.3800 level, but quickly back off that level and remained steady at 1.3775 for most of London dealing. Although the rally in the EUR/USD over the past several week has been highly impressive, the pair is now running into very stiff resistance at the 1.3800 level just ahead of the yearly highs. The euro is also not being helped by the lackluster economic data with the EU IP the latest data point to disappoint investors as it printed at -1.1% versus 0.4% eyed. Its difficult to imagine much further upside for the euro given the disinflationary impact on growth a higher exchange rate would impose on the EZ economy.

In North American trade the focus will turn to US Retail Sales with the market looking for no change in the core number from the 0.2% reading the month prior. However given the stronger than expected NFP number, the prospect for an upside surprise is good. If the Retail numbers show a strong beat, they would provide yet another reason for an early taper and could spur a rally in USD/JPY that would lift the pair back through the 103.00 level before the end of day.

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