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Forex Afternoon Update – 10th December

Article Originally Posted on Orbex Forex Trading Blog

Forex Afternoon Update Key Notes

  • Westpac Consumer Sentiment declines -5.7% from 1.9% previously
  • Japan BSI Manufacturing Index 8.1 vs. 13.1 forecasts
  • Japan PPI y/y 2.7% as expected
  • Australia home loans m/m 0.3% vs. 0.1% forecasts
  • China CPI y/y 1.4% vs. 1.6% forecasts; PPI y/y -2.7% vs. -2.3% forecasts
  • Japan consumer confidence 37.7 vs. 39.6 forecasts
  • French industrial production m/m -0.8% vs. 0.2% forecasts

The markets were quiet for most of today's trading session after yesterday's sell off in the Greenback. Australia's fundamentals showed the Westpac consumer confidence decline to -5.7% from 1.9% last month while the home loans rose 0.3% monthly beating estimates. AUDUSD managed to bounce off the intraday lows of 0.8264 levels but trading lower than yesterday's high of 0.8371 levels. The Kiwi Dollar was also seen to be trading within the high and lows from yesterday ahead of tonight's RBNZ interest rate decision.

The Yen's strength seemed to ease a bit after yesterday's sharp decline across the board with most of the pairs seeing a ranging price action pattern for most of the day into the US trading session open. Further weakness could be expected should the demand for the Yen and the Swiss Franc continue to grow in the coming days. The US Dollar Index has retreated after resistance at 89.20 levels held. A daily close below 88.45/.5 levels (today's low) could spell further weakness in the US Dollar. If the minor support at 88.45/.5 levels do hold the declines, the Dollar Index could well be looking to clearly break out from the previous resistance at 89.20 to make fresh new highs for the year.

The European trading session was quiet with no major market events on tap. French industrial production weakened -0.8% below estimates with the nonfarm payrolls also posting declines of -0.3% quarterly. The Euro single currency was little changed on the news with the pair heading back to the daily pivot after reaching resistance yesterday at the levels of 1.242 ahead of the US trading session.

In the UK, comments from BoE's McCafferty did little to boost the Cable. Considered a hawk in the BoE's monetary policy committee, McCafferty was of the view that the BoE should start raising interest rates sooner and that the downward inflationary pressures were only a one off event. BoE's Governor Mark Carney, in an interview was reportedly of the view that the interest rates would rise regardless of inflation which sets the tone for a BoE interest rate hike anytime after the May 2015 general elections in the UK. The GBPUSD was mostly choppy ahead of the US trading session.

OPEC released its monthly statement today noting that the demand for Crude Oil in 2015 is likely to weaken further with supply levels to resume at current output. Demand for OPEC crude oil in 2015 is expected to be revised down to 28.9 million barrels a day (mb/d), which is about 0.4mb/d less from 2014. Crude oil futures were little changed on the news as the pair trades near 5-year lows of 62.45.