FX Consolidates Ahead of FOMC

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Market Drivers December 13, 2016
Chinese data beats
UK CPI in line
Nikkei 0.50% Dax 0.81%
Oil $53/bbl
Gold $1160/oz.

Europe and Asia:
CNY Industrial Production 6.2% vs. 6.1%
CNY Retail Sales 10.8% vs, 10.1%
GBP UK CPI 1.4% vs. 1.3%
EUR GE ZEW 13.8 vs. 14.0

North America:
No Data

It’s been a sideways night of trade in the currency market with the dollar finding a small bid against the majors despite the fact that US yields have retreated from their multi- year highs set yesterday.

In Asia, Chinese data came in better than expected with Industrial Production printing at 6.2% versus 6.1% while Retail Sale rose an impressive 10.8% from 10.1% eyed. The Chinese economy has clearly stabilized over the past few months and that fact should bode well for global demand into early next year, but the impact of the news was very limited as both Aussie and kiwi slid off the session highs by London morning trade. Still both comm dollars remain in a very narrow range between .7550-.7450 for Aussie and .7100-.7200 for kiwi as the high yielders await the FOMC decision tomorrow.

In Europe, UK CPI printed generally in line at 1.2% versus 1.1 eyed. According to ONS, “The rate in November was the highest since October 2014, when it was 1.3%. Rises in the prices of clothing, motor fuels and a variety of recreational and cultural goods and services, most notably data processing equipment, were the main contributors to the increase in the rate. These upward pressures were partially offset by falls in air and sea fares.”

Cable initially jumped to 1.2724 on slightly hotter core readings, but quickly retreated below the figure as sellers came out to take profits from the rally. Still sterling remains one of the stronger majors against the buck and if the FOMC disappoints tomorrow the pair could easily rise towards 1.2800 as its recovery continues.

With no major data on the docket today and with Retail Sales and FOMC on the calendar tomorrow, today’s session could continue its listless trade for the rest of the day as traders square up for the marquee event of the week.

Boris Schlossberg
Managing Director

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