Dollar remains rampant after bullish NFP

Yesterday’s markets

8th December 2015

  • CHF Foreign Currency Reserves: 563B
  • Eurogroup Meetings
  • BOJ Gov Kuroda Speaks
  • BOE Gov Carney Speaks
  • JPY Current Account: 1.49T
  • JPY Final GDP q/q: 0.3%
  • AUD NAB Business Confidence: 5
  • CNY Trade Balance: 343B

GBP/USD continued to be under pressure yesterday, as the Dollar strengthens. From the Pound’s perspective, Bank of England Governor Mark Carney testified before the European Parliament Committee in Brussels yesterday. The event was relatively muted as Carney reiterated last week’s points. From the Fed, the market reacted tentatively after last week’s bullish non-farm payrolls. The market is now pricing in over an 80% chance that the Fed will raise rates next week.    

Overnight, the world’s second largest economy; China released their trade balance. The trade balance measures the difference in value between imported and exported goods. Overseas shipments fell for a fifth month in November and imports extended a record run of declines and as a result foreign currency stockpile shrank to $3.44 trillion. In addition, the Chinese central bank cut its reference rate as both exports and foreign exchange reserves dropped.

There was a further weakening of global commodity prices. Oil prices continued to slide, WTI had slumped a further 6% to below $38/bbl and Brent Crude was down 5% to under $41/bbl. This was based on OPEC's decision not to cap production. Inflation is such a key aspect to raising interest rates, it will be interesting to see how this plays into the monetary policy across the developed world in 2016.

Today’s markets

7th December 2015

  • GBP Halifax HPI m/m
  • GBP Manufacturing Production m/m
  • EUR ECOFIN Meetings
  • CAD Building Permits m/m
  • GBP NIESR GDP Estimate
  • USD JOLTS Job Openings
  • AUD Westpac Consumer Sentiment
  • JPY Core Machinery Orders m/m
  • AUD Home Loans m/m

With the Fed meeting fast approaching, focus will remain on the economic data released from the world’s largest economy. The JOLTS job openings from the US will be under scrutiny as the employment data plays a key role in the FOMC’s decision making. Also due to hit the wires is the UK manufacturing and NIESR GDP Estimate.