USD mostly weaker as markets continue to trade with a risk-on tone. The Dollar Index is lower for the third straight session and approaches the 80 level as it now trades below the daily Kijun line. Global equities are higher, U.S. stock futures suggest a positive start to the day and UST yields are broadly higher. The buck is weakest against the Scandies - it is currently down about -0.87% against the SEK and -0.66% against the NOK.There was plenty of data released earlier with no monthly change in the headline CPI reading while the core reading printed +0.1% m/m. Housing data showed a decline of -0.1% in building permits to 679K from 680K and a drop of -4.1% in housing starts to 657K from 685K in December. Weekly initial jobless claims fell by 50K to 352K from an upwardly revised 402K at the previous print. Overall, the inflation data was mostly in line with expectations, housing was slightly softer and labor data better as jobless claims continue to trend lower. Due out at 1000ET is the January Philly Fed index which is forecast at 10.3 from the prior 10.3.
EUR has rebounded significantly against most of the majors as sentiment continues to improve.
Auctions today saw borrowing costs fall in Spain and France. The French auction was the first since the country lost its AAA rating from S&P, which did not appear to affect its ability to issue debt. ECB President Mario Draghi spoke earlier and said that he sees 'significant progress' on the fiscal front in Europe, however he noted that the economic situation could worsen. Draghi went on to say that he expects demand for the second 3-yr loan to be 'quite high' and on the topic of ECB bond purchases, he noted that the buys are limited in time and amount. EUR/USD continues to trade higher - currently above the 1.29 figure after having broken above the 21-day SMA.
CAD is mostly firmer on the back of better data, increased risk appetite and higher oil prices. Nov. manufacturing sales rose by more than expected with a monthly gain of +2.0% from the prior -0.6% (cons. +1.2%). Oil is currently higher with WTI crude up about +0.94% and global equities are up across the board. USD/CAD is trading below the base of long-term triangle support and sees the 50% retracement of the rally from July lows to October highs come in around 1.0030/35 as possible support ahead of parity.
AUD lower across the board after a soft December employment report. The employment change fell by -29.3K from the prior -7.5K (cons. +10.0K) with the losses coming from a -53.7K decline in part time employment while full time employment added +24.5K jobs. The unemployment rate unexpectedly fell to 5.2% from 5.3% as the participation rate declined to 65.2% from 65.5%. The weakness in the employment data now suggests further easing in policy by the RBA. The Aussie is weakest against the Scandies (currently down -1.00% against the SEK). AUD/USD is slightly weaker but remains above the 200-day SMA which is around 1.0405/10 as the pair currently trades around 1.0425.
GBP mixed against the G10 currencies - softer against the SEK, NOK, CHF, CAD, and EUR while slightly stronger against the USD, JPY, AUD and NZD. There was little data out of U.K. with only Nationwide consumer confidence that fell to 38 in December as expected from the prior 40. GBP/USD is currently around the 1.5450 level and sees the daily Kijun line come in around the 1.55 figure as the next level of potential resistance.
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