Daily Report: Dollar Higher after G20 Delivered Little Impact

Dollar edges higher as the markets open this week and remains firm after G20 delivered little impact to the markets. The Japanese yen, on the other hand, fails to sustain earlier gains after economic data showed Japanese economy shrank in Q3. The G20 statement called for a “broader policy response” including monetary and fiscal policies but nothing concrete was achieved to revive global growth. The message that individual countries should act “as deemed appropriate to domestic conditions” sounded as if there isn’t any consensus among the participating countries on specific actions. After all, not much was expected from the meeting though.

Japanese Q3 GDP contracted -0.1% qoq, -0.4% annualized, worse than expectation of 0% qoq, 0.1% annualized. Q2’s figures were also revised down from -0.7% qoq and -3.0% annualized to -0.9% and -3.7% respectively. Two successive quarters of contraction in GDP confirmed that Japan is technically in the first recession since 2001. Tertiary industry index dropped -0.6% in Sep, below expectation of -0.5%,. However, Nikkei 225 manages to have some mild gains on utilities stocks and thus erases yen’s earlier gains.

Other data saw Australian retail sales rose less than expected by a mere 0.1% qoq in Q3 even though it’s still an improvement over Q2’s -0.6% contraction. UK Right move house prices fell -2.9% mom, -7.1% yoy in Nov, steeper than prior month’s -4.9% yoy.

Looking ahead, Eurozone trade balance, US Empire State Manufacturing index and industrial production will be released.

Elsewhere, crude oil is mildly down and is struggling around 56 level while Gold also weakens mildly to 736.1.

Technically speaking, main focus will be on whether Dollar Index could take out 87.98 high. Dollar’s momentum is rather unconvincing against Euro and Aussie but resumption of up trend in the dollar index will likely provide some pressure to EUR/USD and AUD/USD. EUR/GBP is showing some loss on intraday upside momentum and retreat from record high of 0.8660 will likely continue today.
By ActionForex