FX market outlook

FX market outlook

Posted on Monday, February 6 2017 at 8:59 am GMT+0000

Aussie hurt by weak retail sales numbers; USD steadies after post-jobs data.


The US dollar dipped below Friday’s post-nonfarm payrolls low against the yen in Monday’s Asian session before steadying.  Elsewhere, the greenback made gains, especially against the aussie which fell after weak Australian retail sales data.

Australia reported an unexpected drop in retail sales for December 2016, with the month-on-month figure slipping 0.1 percent. This follows a rise of 0.1 percent seen in November and missed expectations for a 0.3% increase.

The aussie fell versus the greenback after the data and eventually reached a session low of $0.7651, after being further weighed by disappointing data out of China. The pace of increase in the Caixin Services PMI was slower in January at 53.1 and missed forecasts for a 53.6 reading. It follows a 53.4 reading from December.

With a relatively light economic calendar for today, the market was still digesting the US jobs data from Friday which showed disappointing wage growth despite a strong payrolls increase of 227,000 jobs for the month of January.

The dollar fell sharply after the data on Friday to 112.30 yen. After a brief recovery to the 113-yen level, the greenback weakened again and traded below 112.80 in Monday’s Asian session.

The dollar performed better against the euro and against the pound though. EUR/USD slipped to $1.0746 while pound/dollar fell to $1.2470.

In commodities, gold bounced higher to $1224.93 an ounce while WTI oil rose above $54 a barrel, due to a broadly weaker dollar. The US currency’s value against a basket of currencies has fallen almost 4 percent since early January.

Looking ahead to the rest of the day, the Eurozone Sentix Investor Confidence report is due while ECB President Mario Draghi is scheduled to speak later.