Market Drivers December 14, 2017
AU employment 61K vs. 19K
Majors steady ahead of CB meetings
Nikkei -0.28% Dax -0.14%
Europe and Asia:
AUD AU Employment 61.6K vs. 19.2K
EUR EZ Flash PMI 58 vs. 57.2
GBP UK Retail Sale 1.1% vs. 0.4%
GBP BoE 07:00
EUR ECB 08:30
USD Retail Sales 8:30
Australian employment shocked the market with yet another stunning gain sending Aussie above the .7650 in early Asian trade.
Australia generated 61K new jobs versus 19K eyed as the unemployment rate remained steady at 5.4% while participation rate climbed to 65.5% from 65.1% the month prior. The news caps an incredibly strong year for job in the Australian economy which saw employment expand at 3.2% pace in 2017. Furthermore fully 80% of the jobs have been full-time jobs suggesting that broader GDP growth should remain sound for the foreseeable future.
Over the past few months, the Australian economy has been dogged by weak Retail Sales, muted inflation, and sagging housing prices all of which have weighed on demand and have kept the RBA firmly in neutral territory. But the solid pace of job growth stands as a stunning counterpoint to the recent soft data and should translate into better demand into the start of 2018. At very minimum today’s data should provide support for the Aussie above the .7500 figure over the near-term horizon.
Elsewhere the data beat the forecast as well with EZ PMI climbing to 58 from 57.2 and IFO raising German GDP to 2.6% in 2018 from 2.0% prior as the economic engine of Europe may challenge the growth rates in the US next year.
In UK Retail Sales beat handily coming in at 1.1% versus 0.4% with numbers improving across the board ahead of the holiday shopping season. Cable saw a mild spike above the 1.3450 but remains anchored around those levels as markets await the statement from BoE. Traders are looking for any reaction from UK monetary officials to the recent progress in Brexit negotiations and should the tone of the statement improve sterling could quickly pop to the 1.3500 level.
Later on the day we will see US Retail Sales with markets looking for an improvement from the period prior. Inflation and consumer demand have been the two primary stumbling blocks to Fed’s normalization policy and if today’s data disappoints as well USDJPY could continue its drift towards the 112.00 figure. A better read, however, could propel it above 113.50 as markets begin to price in a tighter monetary policy.
As to the ECB, the focus will be on any guidance with respect to the QE taper as well as the assessment of growth going forward. Mr. Draghi is not expected to offer much fresh info, but if the tone sounds upbeat given the recent strength of data, the EURUSd could quickly catch a bid and push its way towards the 1.1900 figure as the day proceeds.