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FOREX: USD Biased Higher, Up Firmly For The Week

FOREX
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A positive USD bias has persisted for much of Asia Pac Friday trade to date, although aggregate moves aren't large at this stage. The USD BBDXY index is up a little, last above 1289.40. The index is tracking comfortably higher for the week and is now back to late Nov levels. 

  • USD/JPY saw an initial move lower, printing 152.46 not long after the stronger Q4 Tankan printed. However, this was short lived, and we have since tested above 153.00.
  • The Q4 Tankan result, pointing to resilient economic activity/capex, along with solid inflation expectations, is not seen as shifting the near term BoJ outlook (next policy outcome announced Thursday Dec 19). Market pricing of a shift next week is just under 16% at this stage, we were above 60% in late November.
  • US-JP yield differentials continue to trend in favor of the USD. The next firm short-term resistance is at 153.66, a Fibonacci retracement. 
  • AUD and NZD have also fallen, although losses are only close to 0.10% at this stage. We were weaker as China and Hong Kong markets opened weaker, amid disappointment from the CEWG (around no new stimulus details) but we sit slightly above these lows now. AUD/USD was last 0.6360/65, NZD around 0.5760/65.
  • US yields sit close to flat, while US equity futures are in the green, but away from best levels. Regional softness led by China/HK a likely weight.
  • EUR/USD is tracking lower, last under 1.0460.
  • Looking ahead, we have UK data headlined by monthly GDP. French CPI revisions are also due. In the US, only Nov trade prices are on tap. 
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A positive USD bias has persisted for much of Asia Pac Friday trade to date, although aggregate moves aren't large at this stage. The USD BBDXY index is up a little, last above 1289.40. The index is tracking comfortably higher for the week and is now back to late Nov levels. 

  • USD/JPY saw an initial move lower, printing 152.46 not long after the stronger Q4 Tankan printed. However, this was short lived, and we have since tested above 153.00.
  • The Q4 Tankan result, pointing to resilient economic activity/capex, along with solid inflation expectations, is not seen as shifting the near term BoJ outlook (next policy outcome announced Thursday Dec 19). Market pricing of a shift next week is just under 16% at this stage, we were above 60% in late November.
  • US-JP yield differentials continue to trend in favor of the USD. The next firm short-term resistance is at 153.66, a Fibonacci retracement. 
  • AUD and NZD have also fallen, although losses are only close to 0.10% at this stage. We were weaker as China and Hong Kong markets opened weaker, amid disappointment from the CEWG (around no new stimulus details) but we sit slightly above these lows now. AUD/USD was last 0.6360/65, NZD around 0.5760/65.
  • US yields sit close to flat, while US equity futures are in the green, but away from best levels. Regional softness led by China/HK a likely weight.
  • EUR/USD is tracking lower, last under 1.0460.
  • Looking ahead, we have UK data headlined by monthly GDP. French CPI revisions are also due. In the US, only Nov trade prices are on tap.