Market Drivers for November 18, 2013
USD/JPY slips below 100.00 as dollar weakens a bit
EZ Trade Balance in line
Nikkei -0.01% Europe -.01%
Oil $93/bbl
Gold $1282/oz.

Europe and Asia:
GBP Rightmove -2.4% vs. 2.8%
EZ CA 13.7B vs. 18.3B
EZ Trade Balance 14.3B vs. 14.3B

North America:
USD NAHB Housing 10:00

The currency markets started off the week on a slow note with dollar weakening somewhat as EUR/USD crossed the 1.3500 mark while USD/JPY dipped below the 100.00 figure. Investors were initially enthusiastic in Asia, bidding up equities in the wake of the reforms announced by Chinese Party Third Plenum, but while Shanghai gained, the rally in Nikkei withered and USD/JPY tumbled along with it dropping to a low of 99.77 before finally finding some bids.

Aussie was the one high beta currency that did enjoy a healthy bounce as it cleared the 9400 level to rise all the way to 9419. The upbeat mood in China helped boost the unit and caught some of the specs scrambling to cover their shorts. The Aussie had been under considerable amount of selling pressure as the recently weak economic data the constant jawboning by the RBA has pushed the pair lower by more that 300 points over the past several weeks.

However, despite the fervent desire of the Australian policy makers to see the unit trade lower, the Aussie has remained stubbornly bid as the data out China continues to show modest but nevertheless consistent growth. Tomorrow the bears are geared for a dovish RBA minutes, but unless the monetary authorities hint at an imminent rate cut the sell off in Aussie may be modest especially if Chinese PMI data due later in the week continues to show expansionary promise.

Elsewhere the action was very slow with virtually no economic data on the calendar. In EZ the Trade balance came in at 14.3B as expected but had little impact on trade. Despite the interest rate cut by the ECB and the threat of possible negative deposit rates, the EUR/USD has remained remarkably resilient taking out the 1.3500 figure in today trade and recovering all o the losses post ECB decision.

One possible reason for the unit’s strength is the continuous flow of capital into European equities. The European markets may be seeing an end of the year melt up as investor chase relative cheapness of European stocks and help prop the euro in the process.

In North America today the docket remains quiet with only TICS and NAHB data on the calendar and currency markets may take their cue from equities. With USD/JPY failing to hold the 100.00 level overnight, the bears may try to press their advantage and see if they can push the pair towards 99.50 and sow some doubt as to whether the latest breakout was just another upside failure.

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