Last Updated: 02 April 2014
By Rob Samson
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Analysts expect a headline of +7k in December (November was +15.5k) will be more than fully made up of part time jobs. The third Thursday of the month should also reveal what the RBA was up to in FX in Dece mber
The main release in Europe is final Eurozone December HICP. Published expectations are for +0.8% y/y, unchanged from the flash, though we still have question marks over the maths given the soft German data (and that's a debate which might be continued when we eventually get to see German Q4 GDP after Wednesday's annual GDP figure suggests it could well be flat!) The UK gets RICS house price data just after midnight.
In the US the Empire survey has put the pressure on the Philly Fed version where we expect anything below double figures might now be a disappointment.
Before that December CPI is expected at +0.4% m/m but with the core at +0.2%, while we do look for a 15k fall in initial claims to a below trend 315k. The NAHB homebuilders survey is also due (4CAST 57 from 58).
Thursday's Fed speakers are the moderate Williams and outgoing Chairman Bernanke.
Spain is the main interest on the bond auction calendar, while the UK has a Gilt auction too. The US reporting season is hotting up with Goldman Sachs, Citigroup and Intel among the big names.
Citigroup remain confident of further gains: "CAD may underperform due to the weak Canada jobs data and PMI. GBP/CAD may climb to 1.8326, with support at 1.7768."
Shaun Osborne at TD Securities says:
"GBPCAD remains well-supported on modest weakness but the market’s chop around channel resistance in the 1.80 area suggests that there are rising risks of a drop back to the 1.7775 area—though perhaps little more than that. We remarked yesterday that the cross had plenty of opportunities to weaken in December as the broader rally started to show signs of tiring but there was little sustained interest in pushing the GBP significantly lower.
"That remains the case as underlying trend momentum here retains a very bullish on the daily chart — a situation reflected on the longer-term studies too. There is limited scope for GBPCAD weakness at the moment. We still think the cross can reach 1.82 near-term (1.90 from a longer-term perspective looks reachable)."
"The GBP/USD inched lower over the last 24 hours, but volatility in the pair remains generally subdued. For today, the pair is likely to continue consolidating within the relatively tight 1.6350-1.6500 zone, and with rates near the middle of that area with no obvious momentum, we have a neutral bias for the next 24 hours. A break below 1.6350 or above 1.6500 would open the door for a continuation in the same direction, if seen."
"GBP/USD's continues to consolidate just above the key low at 1.6338 (06/01/2014 low). We favour a further swing higher to retest nearthe 1.6600 region, before a more meaningful correction lower can be realised. Resistances can be found at 1.6466 (intraday high) and 1.6517.
"The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the strong resistance at 1.7043 (05/08/2009 high). A break of the support at 1.6220 would negate this positive outlook implied by the recent new highs. Another key resistance lies at 1.6747 (28/04/2011 high)."
"EUR/GBP needs to break back over 0.8467 (17/12/2013) in order to validate the move lower to 0.8237 (09/01/2014 low) as being a false break lower. In the meantime, scope remains for a retest of this region. However, strong support would be anticipated there, should it be retested." - MIG Bank.
"Long at 0.8315 for 0.8432; stop 0.82." - Danske Bank.
"There is nothing of significance on the UK calendar today, but GBP performed well yesterday considering the weaker than expected CPI data. While this probably doesn’t significantly change the timeline for Bank of England action, the CPI decline came in spite of strong energy price rises, and suggests there may be more declines to come, underlining the lack of urgency for any move.
"Nevertheless, UK retail sales data on Friday is likely to be more important, and the risks for this seem to be slightly on the low side of market expectations, so while we see scope for GBP strength later in the month, there may yet be some downside for the British Pound (GBP) this week."
"Better-than-expected economic data in the US continued to support risk sentiment and the dollar in Asia. US Treasury yields continued to rise in Asia following strong US data. Asian equities were also broadly stronger, led by the Nikkei 225, which was up 2.2% at the time of writing. This follows the move higher in USD/JPY, which has appreciated 1.2% over the past 24 hours. Among other G10 currencies, the AUD and the NZD were the worst performers; the latter pulling back after the trade-weighted index neared an all-time high yesterday." - Barclays.
Dallas Fed chief Richard Fisher vowed to use his vote to support cuts to the programme of asset buying even if it prompted a global equity market correction lower.
"Were a stock market correction to ensue while I have the vote, I would not flinch from supporting continued reductions in the size of our asset purchases as long as the real economy is growing, cyclical unemployment is declining and demand-driven deflation remains a small tail risk," Fisher told the National Association of Corporate Directors in Dallas.