Fx moves on strong data (SEK) and words (EUR)

December 22, 2016

The releases in Canada and the USA coming this afternoon qualify as key market drivers of the week as we pointed out on Monday. The first part of the day was also interesting from the fx perspective despite the pre-holidays mood settling in.

The Swedish retail sales showed an important rebound and finally go in the direction indicated by more upbeat consumer sentiment and producer prices simply surged in November from 2.2 %YoY to 3,6%. Such a set made SEK extend the gains that appeared after the yesterday Riksbank meeting which showed that the bank’s policy is departing from the path of ECB’s.

It was not easy to beat the euro this morning. EURUSD had several attempts to push at least above 1.045 after the lowest levels since 2003 were seen just two days ago. The impulse was delivered by ECB’s Jens Weidmann worried that the central bank will wait too long with a rate hike. We described our view on the prospects for EURUSD.

New Zealand was the last G-10 economy to report 3Q GDP result. The outcome released at night was much stronger than expected in terms of QoQ growth: 1,1% instead of 0.8% with the growth driven by the construction sector with household spending and manufacturing also strong. Due to negative revisions for 1-2Q the YoY economic growth was not 3.6%, but 3.5% 

The data from GfK on British consumer sentiment is a mixed bag with signals of increasing worries about economic outlook, but at the same time growing appetite for major purchases. GBP was generally trading on the back foot but the scale of loss was insignificant against the previous moves of the pound against USD.

 We also got more comments from Chinese officials, including the president that stability will be the main focus of government economic policy in 2017 with particular attention on preventing asset bubble bursts and curbing house prices. 

There is data on the PCE inflation, personal expenditures, weekly jobless claims, durable orders and a final estimate of the Q3 GDP - by far the most important package left to be released this year in the USA. All coming at 1:30pm. Canadian retail sales and CPI (also at 1:30pm) can also prove to be a market mover.

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