The force is with the Dollar

Yesterday’s markets

18th December 2015

  • German Ifo Business Climate: 108.7
  • GBP Retail Sales m/m: 1.7%
  • USD Philly Fed Manufacturing Index: -5.9
  • USD Unemployment Claims: 271K
  • USD Current Account: -124B
  • NZD ANZ Business Confidence: 23.0
  • JPY Monetary Policy Statement

After the Fed raised rates as markets expected to 0.5% yesterday, the markets started off on a steady note. However, while the actions were digested the greenback started to make slow but steady gains throughout the day. Sterling did see some relief as November’s retail sales figure came at a bullish 1.7%, far above the expectation of 0.6%. The increased sales were a result of retailers extending their Black Friday sales over the weekend, tied in with pre-Christmas spending. Annually the figure has increased by 5% which boosted the Pound initially, but this was short lived as the Dollars dominance kicked back in and pushed cable down to an eight month low.

Yesterday afternoon saw the release of the weekly US unemployment claims, which came out as expected at 271k, but a poor reading was seen as the Philly Fed manufacturing index posted a bearish figure of -5.9.  This fall for conditions for manufactories is the lowest level seen this year for Philadelphia in the month of November.

Today’s markets

17th December 2015

  • BOJ Press Conference
  • CAD Core CPI m/m
  • CAD CPI m/m
  • CAD Wholesale Sales m/m
  • FOMC Member Lacker Speaks

A surprise came from the Bank of Japan early this morning, as they announced plans to increase purchases of exchange-traded funds, and also lengthen the maturity of bonds it purchases. The purpose behind these new measures is to again encourage investment in its economy whilst keeping rates held and stick to its current MPC plans. This is to increase the monetary base by 80 trillion Yen a year. The Yen did initially depreciate against the Greenback but managed to recoup the losses after the full additional plans were revealed.

Today, despite the BOJ this morning it is a very quiet day with no high tier data releases. Today will again see if the dollar makes further gains after the first rate increase seen Wednesday for the first time in over nine years.