Market Watch: Dollar Consolidates

Financial and commodity markets analytics

As interest rates continue to fluctuate, the dollar consolidates its recent movements. Dollar bloc currencies have the worst performance of the G10 currencies, but the dollar is still above JPY151.00. 
Equities trade with a stronger bias. Taiwan, South Korea and India are the exceptions to this rule in Asia Pacific. Stoxx 600 in Europe is on the verge of ending a three-day gain. US index futures also trade lower. 
Gold is stable, but still within yesterday's range. The $1970-80 region is a strong resistance. Yesterday,
US oil stocks were at three-months highs. This helped to send December WTI down 2%. Today, follow-through sales pushed the contract to nearly $75.65.

Asia Pacific
The Japanese trade balance went back to deficit in October after a surplus of JPY 72 billion in September. The monthly deficit is about JPY856 billion. Exports grew 1.6% year-over year in the period from January to October, despite the weakening yen. Imports dropped 12.5%. 
The dollar recovered most of its losses to the yen as US rates recovered from what appeared to be an overreaction in response Tuesday's CPI. 

Australia did create 55k jobs in the last month but that was not enough to keep unemployment from increasing to 3.7%. RBA Governor Bullock acknowledged recently that the labor market has eased. 
The Australian dollar rose to $0.6500, before it stalled in the morning of European trading. Today, range-trading is the most probable scenario in North America.

The markets do not show any signs of investors being nervous about tomorrow's Moody's review of Italy. The premium Italy has over Germany for the 10-year period has decreased by six basis points in the last week, and the premium on the 2-year period has dropped by nearly 10 bp. Remember that Moody's Baa3 rating puts Italy one level above investment grade. Rating agency has a negative outlook. 

Yesterday, the euro fell to $1.0830, but it has held steady today. 
Sterling is also experiencing a similar price movement. It lost a cent to get close to the $1.24 region.

US retail sales came in a little stronger than expected, while producer prices came in lower than expected. The US rate was lifted after Tuesday's sharp drop, and the dollar gained support. 
Today's torrent of US data continues. Most important is the October Industrial Production report. It is expected to fall and fully offset September's 0.3%. The weekly jobless claims for the last two months have ranged between 200k and 220k, but continuing claims are on the rise (seven weeks in a row), which is consistent to slower hiring. 

The greenback lost a lot of ground after the big outside day on Tuesday. Its losses reached CAD1,3655 before the corrective forces kicked in. In choppy, sideways and even if choppy price action, the US dollar recovered from CAD1.3685 to CAD1.3685.