Forex: Euro, Pound and Franc Soar Against US Dollar. What Happened?
Talking Points:
US Dollar Plummets Against European FX, Holds Up Elsewhere
Regional Haven Flows May Help Explain Unusual Price Action
Thin Liquidity Conditions Likely Amplifying FX Market Volatility
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The US Dollar is trading sharply lower, falling as much as 0.4 percent on average against its leading counterparts. The Swiss Franc and the Euro are leading the way higher against the greenback, rising as much as 1.1 and 0.8 percent respectively. The British Pound is not far behind, adding as much 0.6 percent against the US unit.Curiously, gains in non-European FX majors are conspicuously more restrained.
A discrete catalyst for the move is not readily apparent. Regional haven flows may be a possible explanation however. If that is the case, the current dynamic may not have staying power once US financial markets come online and bargain-hunters enter the fray, looking to buy Dollars on the cheap with an eye toward continued “tapering” of Fed QE in 2014.
It is also worth noting that market liquidity conditions are probably extremely thin, with many traders off for the holidays and those at their desks probably unwilling to commit directionally so close to the turn of the calendar year. Lackluster liquidity can amplify moves that would have otherwise appeared more restrained, making for outsized volatility. That warns against interpreting the magnitude of today’s moves as indicative of lasting follow-through.
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Asia Session:
GMT | CCY | EVENT | ACT | EXP | PREV |
23:15 | Markit/JMMA Manufacturing PMI (DEC) | 55.2 | - | 55.1 | |
23:30 | JPY | Household Spending (YoY) (NOV) | 0.2% | 1.8% | 0.9% |
23:30 | JPY | Jobless Rate (NOV) | 4.0% | 3.9% | 4.0% |
23:30 | JPY | Job-To-Applicant Ratio (NOV) | 1.00 | 0.99 | 0.98 |
23:30 | JPY | National CPI (YoY) (NOV) | 1.5% | 1.5% | 1.1% |
23:30 | JPY | National CPI Ex-Fresh Food (YoY) (NOV) | 1.2% | 1.1% | 0.9% |
23:30 | JPY | National CPI Ex Food, Energy (YoY) (NOV) | 0.6% | 0.5% | 0.3% |
23:30 | JPY | Tokyo CPI (YoY) (DEC) | 0.9% | 0.9% | 0.9% |
23:30 | JPY | Tokyo CPI Ex-Fresh Food (YoY) (DEC) | 0.7% | 0.7% | 0.6% |
23:30 | JPY | Tokyo CPI Ex Food, Energy (YoY) (DEC) | 0.3% | 0.3% | 0.2% |
23:50 | JPY | Industrial Production (MoM) (NOV P) | 0.1% | 0.4% | 1.0% |
23:50 | JPY | Industrial Production (YoY) (NOV P) | 5.0% | 5.4% | 5.4% |
23:50 | JPY | Retail Trade (YoY) (NOV) | 4.0% | 3.0% | 2.4% |
23:50 | JPY | Retail Trade s.a. (MoM) (NOV) | 1.9% | 1.0% | -0.9% |
23:50 | JPY | Large Retailers' Sales (NOV) | 0.6% | 0.7% | -0.1% |
1:30 | CNY | Industrial Profits YTD (YoY) (NOV) | 13.2% | - | 13.7% |
1:30 | JPY | Labor Cash Earnings (YoY) (NOV) | 0.5% | 0.3% | -0.1% |
4:00 | JPY | Vehicle Production (YoY) (NOV) | 10.2% | - | 10.1% |
7:03 | CNY | Leading Economic Index (NOV) | 99.64 | - | 99.62 |
Euro Session:
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
7:45 | French PPI (MoM) (NOV) | 0.5% (A) | -0.3% | Low | |
7:45 | EUR | French PPI (YoY) (NOV) | -0.6% (A) | -1.3% | Low |
Critical Levels:
CCY | SUPP 3 | SUPP 2 | SUPP 1 | Pivot Point | RES 1 | RES 2 | RES 3 |
1.3610 | 1.3648 | 1.3669 | 1.3686 | 1.3707 | 1.3724 | 1.3762 | |
1.6217 | 1.6308 | 1.6359 | 1.6399 | 1.6450 | 1.6490 | 1.6581 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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