Weekly Outlook: 2014, December 07 - 14

The Australian dollar ended Friday's session at the lowest level in more than four years against its U.S. counterpart, after data showed that the U.S. economy added much more jobs than expected last month, underlining the view that the Federal Reserve will move closer to raising interest rates.

AUD/USD fell to 0.8309 on Friday, the pair's lowest since June 2010, before subsequently consolidating at 0.8311 by close of trade on Friday, down 0.87% for the day and 2.25% lower for the week.

The pair is likely to find support at 0.8261, the low from June 10, 2010, and resistance at 0.8428, the high from December 4.

The U.S. dollar rallied after the Department of Labor said that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

October’s figure was revised up to 243,000 from a previously reported 214,000, while the unemployment rate remained unchanged at a six-year low of 5.8%.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

The US dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

Meanwhile, in Australia, the Reserve Bank of Australia left interest rates unchanged at a record-low 2.5% on Tuesday and reiterated its intention to keep borrowing costs at record low levels for an extended period of time.

On Wednesday, data showed that Australia's economy expanded 0.3% in the third quarter, below expectations for a gain of 0.7%. Year-on-year, gross domestic product rose 2.7%, compared to expectations for an expansion of 3.1%.

Reports on Thursday showed that retail sales rose 0.4% in October, more than the expected 0.1% gain, while the country's trade deficit narrowed to A$1.132 billion in October from A$2.23 billion in September.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

China is to produce what will be closely watched reports on trade, consumer prices and industrial production in the week ahead. The Asian nation is Australia's largest trade partner.

Monday, December 8

• China is to publish data on the trade balance, the difference in value between imports and exports.

Tuesday, December 9

• Australia is to publish private sector data on business confidence.

Wednesday, December 10

• Australia is to produce private sector data on consumer sentiment, as well as official data on home loans.
• China is to publish data on the consumer price index.

Thursday, December 11

• Australia is to publish data on the change in the number of people employed and the unemployment rate.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source

The New Zealand dollar fell to a four-week low against its U.S. counterpart on Friday, as stronger than forecast U.S. nonfarm payrolls data bolstered bets that the Federal Reserve will begin to raise rates sooner than previously thought.

NZD/USD hit 0.7700 on Friday, the pair's lowest since November 7, before subsequently consolidating at 0.7715 by close of trade on Friday, down 0.86% for the day and 1.61% lower for the week.

The pair is likely to find support at 0.7659, the low from November 7, and resistance at 0.7821, the high from December 4.

The U.S. dollar rallied after the Department of Labor said that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

October’s figure was revised up to 243,000 from a previously reported 214,000, while the unemployment rate remained unchanged at a six-year low of 5.8%.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

The US dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

A policy decision by the Reserve Bank of New Zealand on Wednesday will also be in focus.

Meanwhile, China is to produce what will be closely watched reports on trade, consumer prices and industrial production in the week ahead. The Asian nation is New Zealand's second-largest trade partner.

Monday, December 8

• China is to publish data on the trade balance, the difference in value between imports and exports.

Wednesday, December 10

• China is to publish data on the consumer price index.
• Later in the day, the Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

Thursday, December 11

• RBNZ Governor Graeme Wheeler is to testify before the Finance and Expenditure Select Committee in Wellington. His comments will be closely watched.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source

The euro dropped to two-year lows against the dollar on Friday after the U.S. nonfarm payrolls report for November showed that the U.S economy added jobs at the fastest rate in nearly three years, highlighting the diverging recovery in the U.S. and the euro zone.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The report also showed that average hourly earnings rose by a larger than forecast 0.4% and were 2.1% higher on a year-over-year basis.

EUR/USD fell to two-year lows of 1.2272 and settled at 1.2281, off 0.78% for the day. For the week, the pair was down 1.24%.

The unusually strong jobs report prompted markets to bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 ahead of the data.

The euro had moved broadly higher on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

He said the bank could potentially change the size, scale and composition of its existing stimulus programs and added that governing council remained unanimous that it would take further measures if needed.

The ECB also substantially revised down its forecasts for growth and inflation and warned that the latest forecasts do not take into account the recent steep drop in oil prices.

The bank now expects the euro zone economy to grow by just 0.8% this year, 1.0% in 2015 and 1.5% in 2016. It cut its inflation forecast for this year to just 0.5% from 0.6% and to 0.7% in 2015 from 1.1%.

The euro rose to six-year highs against the yen on Friday, with EUR/JPY at 149.23 in late trade.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday data on U.S. retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

The euro zone economic calendar is light, with no major economic reports scheduled for release except for Friday’s report on industrial production.

Monday, December 8

• Germany is to publish data on industrial production while research group Sentix is to publish a report on euro zone investor confidence. Meanwhile, the Eurogroup of finance ministers are to meet in Brussels.

Tuesday, December 9

• Germany is to publish data on the trade balance.

Wednesday, December 10

• France is to publish data industrial production.

Thursday, December 11

• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• The euro zone is to publish a report on industrial production.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source