Greenback Strengthens Against Yen

Daily Analysis - 29/11/2017

Batch of Strong Economic Data Boosts Dollar


The greenback added to gains notched a session earlier against the Japanese Yen to trade higher on overnight after US consumer confidence soared to a fresh 17-year high in November. Dollar bulls were further emboldened after the Republican tax bill was passed by the Senate Budget Committee on Tuesday.

Markets Shrug Off North Korea Missile Launch

The US dollar drew broad bids following a report that showed consumer confidence in the country unexpectedly surged to a new 17-year high in November. The Conference Board's widely-tracked index of consumer confidence advanced to 129.5 this month after registering a reading of 126.2 in October, outperforming the consensus estimate anticipating a decline to 124.0. Separately, home prices in 20 leading US cities jumped by the most in over three years in September, rising by 6.20% year over year per figures published by S&P CoreLogic Case-Shiller. On the geopolitical front, North Korea fired a ballistic missile early Wednesday, which despite landing inside Japan’s Economic Exclusion Zone, failed to exert much influence on the currency markets. The greenback gained 0.40% against the Yen on Tuesday before pulling back from overnight gains to trend back below 111.500.


Pound Spikes on Report of Brexit Deal

The British Pound is rallying against the Euro after the London-based Daily Telegraph said the European Union and the United Kingdom had reached an agreement over a Brexit financial settlement. The in-principle settlement, which the news report put at between €45 billion and €55 billion, has been a major obstacle to advancing the divorce negotiations. Though both sides refused to officially comment on the development, the UK Department for Exiting the European Union issued a statement, remarking that “intensive talks” were ongoing to “build on recent momentum.” If the divorce bill is settled, the UK will have until Monday to resolve the last major thorny issue which revolves around the status of the Irish border. EURGBP tumbled below 0.8900 amidst the deal rumours to hit a Tuesday low of 0.8847 before retaking the 0.8850 level earlier.


Bad Weather Depresses Japanese Retail Sales

Two typhoons and heavy rain kept Japanese consumers away from stores and restaurants in October, resulting in the first annualized decline in retail sales in a year.  According to data issued by the country’s Economy Ministry overnight, sales edged -0.20% lower last month compared with the year ago period, led by weakness in food and beverage sales. The result however matched the median estimate in a Reuters poll of economists. Sales of food and beverages slipped -1.50% from a year ago, the first dip in eight months, while equipment and machinery sales declined -0.90% as some consumers decided to postpone purchases of smart phones ahead of the launch of new models this month. October’s retail sales data marked the first major consumption report for the current quarter, and signals more challenges may lie ahead for the economy. AUDJPY is currently hovering around 84.700, off the lows of Wednesday Asian trade.


Political Uncertainty Fails to Dent German Consumer Morale

The upbeat mood among German consumers rolled over into an early December reading despite the current political impasse in the country.  The Nuremberg-based GfK Institute’s Consumer Sentiment Indicator, which is compiled from a survey of 2,000 citizens, held steady at 10.7 heading into December, narrowly trailing the consensus forecast for a reading of 10.8. The sub-index measuring income expectations fell to 47.9 but continued to remain at a historically high level, while economic expectations rose to 44.3. Europe's largest economy remains absent a coalition government more than two months after the general election failed to produce a decisive mandate. At this point, analysts reckon serious talks to forge a coalition are now likely to begin in 2018 as the current year winds down. DAX 30 futures rallied following the release of the bullish report to finish Tuesday at 13113.


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