That all started with a quiet trading session in Asia as Australian traders were off for Australia Day celebration. Japanese data was the only significant news to watch on Monday. The Corporate Services Price Index has been published with a slight decline year-over-year, while the Bank of Japan released its meeting minutes. Nothing surprisingly positive came in, so USD/JPY and AUD/JPY currency pairs were trading in the put mode. Hong Kong trade balance came in in red as well, signalling that the economic slowdown might hit Asian region in 2019. European data was published later with the main event of M3 Money Supply and Private Sector loan. The mixture of news and ECB President Draghi’s speech weighed on traders’ sentiment and forced them to buy mainly put options for the pair. The British Pound also went off the last week’s highs due to the lack of any positive news in the Brexit field. BoE Governor Carney also had a press conference on Monday, stating that uncertainty is not the best factor for the regulator to start hiking the interest rates despite the certain positive tone of the recent economic reports.
New Zealand reported trade balance between American and Asian trading sessions on Tuesday. The report was generally positive with most of its components including the total positive surplus beating the market expectations. However, the previous reading was revised down significantly and the initial reaction to buy call options for NZD/USD did not last. The pair charted just a long tail on the daily candlestick. Trade balance worsened in Switzerland as well, which caused the Swiss Franc trading in the put mode throughout almost the whole week. A large pack of European data came in later. French Consumer confidence picked up, Spanish Employment rate came in slightly lower than it was predicted, Italian PPI was mixed. However, the volatility was quite low on Tuesday as traders were expecting the Federal Reserve to announce the monetary policy update next day. The only event worth mentioning was the CB consumer confidence in the US, which declined in January. The market reaction was limited, especially in the currencies front. Binary options for stock indices gained strength.
Wednesday was completely different. A surprising support came from Australian CPI report. The inflation figures were much stronger-than-expected and Australian dollar surged versus major currencies, especially the greenback and yen. AUD/USD breached 0.7200 resistance on the third attempt, which had changed the technical outlook for the currency to positive. Further gains are possible this week as the Reserve bank of Australia will meet for the interest rate decision this Tuesday, and additional inflationary pressure adds chances for the regulator to start hiking. French GDP came in exactly in line with the expectations, while the consumer spending report was in red, German Consumer Climate improved. Eurozone consumer sentiment survey showed a deeper decline than it was widely anticipated. Nevertheless, EUR/USD did not go far South as traders prefer to wait and see before the Fed’s announcement. Moreover, German CPI (-0.8% vs -0.9% predicted) added demand for call options. So did US data. ADP Non-Farm Employment change showed robust figures from the Labour market, while Pending Home sales declined. Initially, the greenback was trying to gain some strength on that news, but that price action did not last long. The Federal Open Market Committee left the interest rates unchanged, underlining the need of a pause in the tightening cycle. That was exactly what traders were waiting for. US Stock indices rallied, the greenback dropped, while gold prices surged on heavy call-options buying. Even WTI Crude oil was trading on a positive tone as the US inventories showed another week of decline.
Thursday was the day when Asian and European traders were absorbing news from the United States. EUR/USD peaked above 1.1500 resistance, however, the demand for put options came back to the market, and the pair slipped back to 1.1450. Chinese Manufacturing- and Non-Manufacturing PMI improved significantly, beating the market consensus, and that added fuel to the fire of the risk appetite. German Retail Sales was the huge disappointment for Euro bulls. The report dropped to the 11-year low, declining by 4.3% in December after the growth of 1.4% in November. German Unemployment change also showed soft data. Eurozone GDP failed to beat the market expectations. All that negative data pushed traders to buy put options for most EUR pairs. Canadian GDP also failed to impress, however, USD/CAD was trading lower on heavy demand for oil call options as the price of black gold was surging throughout the whole past week.
Friday was the dau of pullbacks. First, Australian PPI failed to confirm CPI positiveness, adding selling pressure on AUD/USD. Second, Chinese Caixin Manufacturing PMI declined, weighing on emerging markets. Third, German Manufacturing PMI and British Construction PMI were also in red. But the most interesting part of the day (if not the whole week) was the US Non-Farm Payrolls report, which surprised investors by a robust number of 304 thousand jobs added in January. That was much stronger than most of the analysts predicted - 164K was the consensus. Moreover, the US government shutdown did not have a significant impact on the labour market. The 3-months average jumped to 241K, which confirmed that the US economy is doing good. US dollar rallied across the board, especially versus the Japanese yen and commodity currencies. The Only exception was the Canadian dollar which kept strengthening on the back of growing oil prices.