Summary:

  • CAD, NZD, AUD all are slightly lower as commodity prices slow down their rally
  • China’s trade balance comes in vastly above forecasts
  • Wall Street hits fresh records fuelled by a surge seen in energy stocks

The Asian session brought a slight retreat seen in the commodity-related currencies such as CAD, NZD and AUD. Nevertheless all of them experienced hefty gains over the past days mainly driven by another increase in the commodity block as well as the stellar employment report from Canada published a week ago. The US dollar index is trading flat at the time of writing but it lost a lot steam yesterday when the EURUSD soared above a 1.20 handle following the hawkish ECB minutes. In terms of the macroeconomic data there was a building permits release from the NZ economy for November showing a 10.8% mom rise against the prior value at -9.6% mom. The kiwi did not gain too much as this is a volatile data set, a year-over-year basis illustrated a decent 8.6% boost though. In turn, the Canadian dollar seems to be giving back some of its latest advances owing to a slight decrease seen in oil prices. Brent is down 0.25% while WTI is losing 0.6% in early Friday’s trading.

link do file download linkThe NZ dollar smashed a resistance placed at 0.72 which could constitute the nearest support right now. Thus, once the price comes back to this level one could consider entering a long with a decent risk/reward ratio. A potential resumption of an uptrend might take the pair at least toward 0.7380. Source: xStation5

In turn, the Australian dollar could be lower due to the Chinese trade data which showed a massive slump (compared to the consensus) in imports. Imports came in at 4.5% yoy while 15.1% yoy had been expected. On the other hand exports came out at 10.9% yoy slightly beating the consensus put at 10.8% yoy. All in all the country’s trade balance grew to $54.7 billion from revised $39 billion. A tremendous decrease in imports could have been a reason for subtle weakness in the AUD as it might herald fading domestic demand in the second largest economy in the world. Notice that there is guesswork that curbed credit and more stricter controls might have contributed to a slowdown in imports which was the slowest since December 2016. Finally let’s add that the China’s trade surplus with the US in 2017 hit a record high of $275.8 billion. It could be a point of contest between the two countries as Donald Trump repeatedly blamed China for artificially high trade surplus.

link do file download linkThe Chinese trade surplus turned out the highest since January 2016. Source: Bloomberg

Looking beyond the FX market one cannot miss out the US stock market which hit fresh records on Thursday. Increases were fuelled by energy shares which in turn were buoyed by soaring oil prices (notice that WTI crossed a $64 handle yesterday for the first time since December 2014). As a result the SP500 (US500) added 0.7%, the Dow Jones (US30) along with the NASDAQ (US100) moved up as much as 0.8%. Thus, a day after the US stock markets snapped their longest winning streak to start a year in more than half a century they regained their footing.

link do file download linkThe US500 broke an upper limit of an ascending channel during the yesterday’s session. Earlier the index tested a local support line nearby 2735 points and it looks as if buyers would be set for another surge where a 2800 handle could be the closest goal for them. Source: xStation5