Daily Report

Euro Soft Despite Solid German Ifo

Typography

Euro stays soft against Dollar in spite of better than expected confidence data. German IFO business climate rose to 111.0 in December, up from 110.4, above expectation of 110.7. Current assessment gauge rose to 116.6, up from 115.6, above expectation of 115.9. Expectations gauge rose to 105.6, up from 105.5, above expectation of 105.5. Ifo president Clemens Fuest noted that "the German economy is in a festive mood."And, "assessments of the current business situation improved, reaching their highest level since February 2012. The business outlook for the first half of 2017 is also slightly more optimistic. The German economy is making a strong finish to the year."

S&P maintained Australia's AAA credit rating with negative outlook. The rating agency warned that "the government's worsening forecast fiscal position, as outlined in its latest budget projections earlier today, further pressures the rating". And, it remains "pessimistic about the government's ability to close existing budget deficits and return a balanced budget by the year ending June 30, 2021". Fitch and Moody's maintained Australia's rating at AAA with a stable outlook. Also from down under, New Zealand NBNZ business confidence rose to 21.7 in December, building permits rose 2.6% mom in October.

BoJ announcement will be the focus in the coming Asian session. The central bank is widely expected to keep policies unchanged, with interest rate at -0.1% and uses the Yield Curve Control framework to cap long term interest rates. Recent sharp depreciation on the Japanese yen eased much pressure on BoJ to add stimulus. Australia will also release RBA minutes.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0405; (P) 1.0440 (R1) 1.0479; More.....

A temporary low is in place at 1.0365 and intraday bias is turned neutral for consolidation. Upside of recovery should be limited below 1.0669 minor resistance and bring fall resumption. Below 1.0365 will extend that larger down trend to next near term target at 100% projection of 1.1298 to 1.0518 from 1.0872 at 1.0092, which is close to parity.

In the bigger picture, break of 1.0461 key support indicates that consolidation from there has completed as a triangle at 1.1298. And, the down trend from 1.6039 (2008 high) is resuming. Current downtrend is now expected to target 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

EUR/USD 4 Hours Chart

EUR/USD Daily Chart

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
21:00 NZD Westpac NZ Consumer Confidence Q4 113.1 108
21:45 NZD Building Permits M/M Oct 2.60% 0.20% -0.20%
23:50 JPY Trade Balance (JPY) Nov 0.54T 0.59T 0.47T
0:00 NZD NBNZ Business Confidence Dec 21.7 20.5
9:00 EUR German IFO - Business Climate Dec 111 110.7 110.4
9:00 EUR German IFO - Current Assessment Dec 116.6 115.9 115.6
9:00 EUR German IFO - Expectations Dec 105.6 105.5 105.5

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