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Forex Analysis: US Dollar Corrects Higher, Wells Fargo Earnings on Tap
The US Dollar corrected higher overnight as prices digested the largest drop in four months. Wells Fargo earnings are now in focus for sentiment trends.
Talking Points
US Dollar Corrects Higher After Posting Worst Selloff in Four Months
Swiss CPI, UK Industrial Production Data Likely to Pass Without Fanfare
Risk Sentiment Trends Look to Wells Fargo Q4 Earnings for Direction
The US Dollar corrected higher – rising against all of its leading counterparts – as prices corrected after yesterday’s aggressive selloff. The greenback fell 0.6 percent, marking the largest single-day drop in close to four months, as risk appetite swelled in the wake of better-than-expected Chinese trade figures. The New Zealand Dollar underperformed.
The economic calendar is quiet in European hours. Swiss CPI is expected to fall 0.3 percent year-on-year in December, marking a narrow improvement from November but keeping deflation concerns alive. On balance, this represents the status quo and is unlikely to drive significant changes in forex traders’ outlook for SNB policy. A narrow improvement in UK Industrial Production will probably pass with little fanfare.
S&P 500 index futures are trading flat, offering no clear bearing on risk appetite trends for the time being. The US data docket is likewise lackluster, turning traders’ attention to the earnings calendar. Wells Fargo is due to report fourth-quarter results and the markets will be keen to gauge the bank’s guidance to inform their outlook for global financial conditions.
Asia Session: What Happened
GMT | CCY | EVENT | ACT | EXP | PREV |
23:50 | JPY | Current Account Total (¥) (NOV) | -222.4B | -17.1B | 376.9B |
23:50 | JPY | Adjusted Current Account Total (¥) (NOV) | 225.9B | 277.4B | 414.1B |
23:50 | JPY | Current Account Balance (YoY) (NOV) | -276.4% | -84.1% | -29.4% |
23:50 | JPY | Trade Balance - BOP Basis (¥) (NOV) | -847.5B | -832.0B | -450.3B |
23:50 | JPY | Bank Lending Banks ex-Trust (DEC) | 1.4% | 1.1% | 1.2% (R-) |
23:50 | JPY | Bank Lending incl Trusts (YoY) (DEC) | 1.2% | - | 1.0% |
1:30 | CNY | Consumer Price Index (YoY) (DEC) | 2.5% | 2.3% | 2.0% |
1:30 | CNY | Producer Price Index (YoY) (DEC) | -1.9% | -1.8% | -2.2% |
5:00 | JPY | Eco Watchers Survey: Current (DEC) | 45.8 | 40.8 | 40 |
5:00 | JPY | Eco Watchers Survey: Outlook (DEC) | 51 | 42.5 | 41.9 |
Euro Session: What to Expect
GMT | CCY | EVENT | EXP | PREV | IMPACT |
8:15 | CHF | Consumer Price Index (MoM) (DEC) | -0.1% | -0.3% | Medium |
8:15 | CHF | Consumer Price Index (YoY) (DEC) | -0.3% | -0.4% | Medium |
8:15 | CHF | CPI - EU Harmonised (MoM) (DEC) | - | -0.5% | Low |
8:15 | CHF | CPI - EU Harmonised (YoY) (DEC) | - | -0.1% | Low |
9:30 | GBP | Manufacturing Production (MoM) (NOV) | 0.5% | -1.3% | Low |
9:30 | GBP | Manufacturing Production (YoY) (NOV) | -1.3% | -2.1% | Low |
9:30 | GBP | Industrial Production (MoM) (NOV) | 0.8% | -0.8% | Medium |
9:30 | GBP | Industrial Production (YoY) (NOV) | -1.9% | -3.0% | Medium |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.3116 | 1.3350 |
GBPUSD | 1.6059 | 1.6222 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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