Forex News Week 50-4

Dollar Rose on Strong Retail Sales by Yan

The dollar rose sharply across the board after a government report showed the retail sales in U.S. increased unexpectedly. The dollar gained almost a cent against the euro, and strengthened to below 1.9650 versus the sterling.

U.S. retail sales rose 1.1% in November, bouncing off the negative 0.4% in the previous month and exceeding the estimate of 0.3%. Excluding autos, core retail sales were up 1.0%, compared with a 0.4% reading month earlier and a forecast of 0.2%. The increase in retail sales in a holiday season was not a big surprise, but still gave the dollar a boost.

U.S. weekly jobless claims due tomorrow morning are expected to lower slightly from 324k to 320k. Also worth noting is that a bunch of economic indictors from US are due this Friday, including a key inflation gauge, CPI.

EURUSD will face interim resistance at 1.3220, followed by 1.3250 and 1.3270. Additional ceilings will emerge at 1.33, backed by 1.3350. Support starts at 1.32, backed by 1.3180, 1.3150 and 1.3130. Subsequent floors are eyed at 1.31.

Yen Remains Weak on Japan Official's Comment

The yen dropped after Japan's Chief Cabinet Secretary Yasuhisa Shiozaki signaled that the government will cut its growth forecast. Shiozaki said forecasts for the economy will take into account the revision to the third quarter GDP. Recall that Japan downwardly adjusted the third quarter GDP from an annual rate of 2% to 0.8%. The yen stayed under pressure as investors are still very short of the yen in the carry trades.

USDJPY encounters interim resistance at 117.60, backed by 117.80 and 118. Subsequent ceilings will emerge at 118.30, followed by 118.50. On the downside, support begins at 117 and 116.70, followed by 116.50. Additional floors are eyed at 116.20, backed by and 116.

Sterling Rose after Employment Data

The sterling rose against the yen after U.K. claimants count unemployment surprisingly fell 5.7k in November, beating the estimate of a 4k increase. The sterling rose to an 8-year high at 231 against the yen.

GBPUSD encounters interim resistance at 1.9680, backed by 1.97, 1.9730 and 1.9750. Subsequent ceilings will emerge at 1.9770, followed by 1.98 and 1.9850. On the downside, support begins at 1.9640, followed by 1.9620 and 1.96. Additional floors are eyed at 1.9570, backed by 1.9550 and 1.95.