Currency Focus
EUR - Trichet is not using any of the more hawkish
language to indicate a rate hike in the next two
meetings, and this is somewhat disappointing for those looking for a clear-cut sign of a rate hike. His comments are disappointing for euro bulls.
GBP - This will have been an open and shut case for the Monetary Policy Committee. January is also shaping up to be a formality, so roll-on February. The continued acceleration in house prices will heighten the Monetary Policy Committee's concern expressed in the minutes of the November meeting that strong housing market activity poses an upside risk to its forecast for household spending. Today's decision was no surprise but people should not be fooled into thinking interest rates have definitely peaked. It is still a 50:50 call as to whether interest rates go up again in the New Year.
JPY - The yen strengthened against the dollar, and rebounded from the lows versus the sterling and the euro on the rising expectations of a Bank of Japan rate hike as early as this month. Several Bank of Japan policy board members, including Atsushi Mizuno and Kiyohiko Nishimura have indicated that the bank may raise rates earlier than the market expects. Following recent BOJ comments, the market is quickly shifting towards a view that the central bank will hike rates before the year-end if machinery order data and the tankan survey are in line with its outlook of the economy.
AUD - We saw some strength in the Australian dollar strengthened after a government report showed the Australia economy added 36,200 jobs in November, exceeding the estimate of 10,000. The unemployment rate was maintained at a low level of 4.6%, also beating the forecast of a rises to 4.8%. The Aussie rose from 0.7840 to 0.7875 against the dollar on the strong job report. But the Australian dollar has weathered a lot of negative economic data this week. With GDP faltering a lot of people are calling an end to rate hikes, most people had become bearish the AUD by this morning. Then the employment data showed yet again that the economy remains at full stretch, and the AUD has escaped once again to the upside.
language to indicate a rate hike in the next two
meetings, and this is somewhat disappointing for those looking for a clear-cut sign of a rate hike. His comments are disappointing for euro bulls.
GBP - This will have been an open and shut case for the Monetary Policy Committee. January is also shaping up to be a formality, so roll-on February. The continued acceleration in house prices will heighten the Monetary Policy Committee's concern expressed in the minutes of the November meeting that strong housing market activity poses an upside risk to its forecast for household spending. Today's decision was no surprise but people should not be fooled into thinking interest rates have definitely peaked. It is still a 50:50 call as to whether interest rates go up again in the New Year.
JPY - The yen strengthened against the dollar, and rebounded from the lows versus the sterling and the euro on the rising expectations of a Bank of Japan rate hike as early as this month. Several Bank of Japan policy board members, including Atsushi Mizuno and Kiyohiko Nishimura have indicated that the bank may raise rates earlier than the market expects. Following recent BOJ comments, the market is quickly shifting towards a view that the central bank will hike rates before the year-end if machinery order data and the tankan survey are in line with its outlook of the economy.
AUD - We saw some strength in the Australian dollar strengthened after a government report showed the Australia economy added 36,200 jobs in November, exceeding the estimate of 10,000. The unemployment rate was maintained at a low level of 4.6%, also beating the forecast of a rises to 4.8%. The Aussie rose from 0.7840 to 0.7875 against the dollar on the strong job report. But the Australian dollar has weathered a lot of negative economic data this week. With GDP faltering a lot of people are calling an end to rate hikes, most people had become bearish the AUD by this morning. Then the employment data showed yet again that the economy remains at full stretch, and the AUD has escaped once again to the upside.
posted by Naveen Pantera at 9:53 PM
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