Forex news and trading headlines 12 December 2016

News:

  • There is only one event to focus on this week
  • BCC raises 2016 GDP forecasts but warns of "a bumpy road ahead in 2017"
  • PBOC's Sheng says interest rate hike unlikely in China
  • EURUSD takes a wander into 1.0600
  • EURGBP rallies through 0.8400 and caps cable
  • USDJPY pops 116.00 only to run into more sellers
  • ECB's Nowotny says bond yield steepening is not bad
  • EU's Moscovici says Italy does not have and will not have a banking crisis
  • German economic ministry says economy to pick up in Q4 after Q3 slowdown
  • Italy will guarantee Monte dei Paschi continuity and client deposits
  • Here's why Morgan Stanley likes an EURGBP short
  • Option expiries for the 10 am NY cut today 12 Dec
  • More FX option expiries of note w/c 12 Dec
  • Nikkei 225 closes up 0.84% at 19,155.03

Data:

  • China vehicle sales Nov yy +16.6% vs +18.7% prev

The session opened with oil rising and yen weakening as the Asian theme continued but we've turned around since as equities dipped and with markets looking ahead to the US Fed decision again. If a hike is already factored in then what happens if they disappoint?

USDJPY opened at 115.40 having had an Asian dip to 115.16 on talk of reduced JGB buying but from here it was a steady rise higher once we broke through solid Fib resistance at 115.62. The reported barrier option provided little resistance and we posted 116.12 in a rush only to retreat back around 115.70 as oil prices ran of out of puff and headed lower giving direction to equities too.

The euro began on the back foot but with EURGBP and EURJPY both enjoying some support EURUSD was propped up above 1.0560 and needed little excuse to rally through 1.0600 to 1.0614 once USD and equities retreated.

EURGBP rallying to 0.8429 from 0.8390 saw GBPUSD fall to 1.2569 having failed to hold above 1.2600 but that move has been reversed and posting 0.8398/1.2628 as I type.

It's been that kind of fickle session that's seen good two-way business as the Fed second-guessing games continue. USDCAD looked at 1.3100-10 as oil rallied but turned higher on the reverse but rallies capped by general USD supply. USDCHF has looked wobbly on CHFJPY demand and USD sales with no sign of SNB as EURCHF holds it own helped by the general bid tone to EURUSD.

AUDUSD and NZDUSD both had an early wobble but both underpinned by the yen selling and making gains as the greenback lost its mojo. Rally sellers for both AUD and NZD still noted though.

A thin day data wise but that's not making any difference to volatility as the hot-coal dancing continues.