The US dollar stayed strongly supported for the most part of the day thanks, in part, to Congress’ moves to avert a government shutdown. US equities also closed in the green. Data was mixed, with the Challenger job cuts report showing a 30.1% year-over-year gain for November and initial jobless claims beating expectations. Consumer credit also advanced, signaling financial optimism.The NFP is expected to show a 198K gain in hiring for November, down from the previous 261K increase. Average hourly earnings could recover by 0.3% after staying flat in the previous month, with positive wage growth likely funneling to upside inflationary pressure later on.
The euro caught a few gains then consolidated for most of the day. Data was actually weaker than expected, with German factory orders down 1.4% instead of rising by 0.9% and the French trade balance posting a larger than expected deficit. The region’s final GDP reading was unchanged at 0.6%. German trade balance and French industrial production data are due next.
The pound had a shaky ride during the earlier sessions before catching a bid on positive Brexit developments. The EU Commissioner shared that progress is being made while May’s rush to Brussels for an early meeting also fueled hopes that a deal will be reached. EU President Tusk scheduled an announcement for the morning as well, so bulls are holding on to their hopes. UK manufacturing and industrial production numbers are also due.
The franc was stuck in consolidation at sentiment flipped back and forth, particularly in the European region. The Swiss jobless rate improved from 3.1% to 3.0% while the SNB foreign currency reserves declined from 742B CHF to 738B CHF, which means that the central bank is probably not trying to actively depreciate the currency. There are no reports due from Switzerland today.
The yen lost ground as the dollar regained its spot as the preferred safe-haven. Data from Japan was actually mostly upbeat, with the GDP upgraded from 0.3% to 0.6% versus the projected 0.4% figure and the current account balance also surpassing estimates. Average cash earnings disappointed with a 0.6% uptick versus the projected 0.8% rise. Yen pairs could take their cue from dollar price action from here.
Commodity Currencies (AUD, NZD, CAD)
The comdolls weakened to the dollar but were able to recover slightly against the yen. Data from Canada was mixed as building permits posted a stronger than expected 3.5% gain while the Ivey PMI dipped. Chinese trade balance is due next and a smaller surplus of $34.9 billion is eyed, possibly signaling weaker demand for raw materials.