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Despite weak economic activity reported from Japan, the yen continues to overpower the bloc’s common currency in the market. Bears are milking the uncertainties and fears around the deadly epidemic that started from China to boost and reinforce the Japanese yen in sessions. Unfortunately for the euro, the impressive German data reported yesterday failed to give it the power to prevent the yen from pulling it lower. Berlin’s ZEW (Zentrum für Europäische Wirtschaftsforschung) economic sentiment rose from 10.7% to 26.7% in December, crushing forecasts of 15.0% improvement. Meanwhile, Japan’s exports, imports, and trade balance reports for December all produced weak figures earlier today. Japan’s exports came only rose to -6.3% from -7.9%, while imports came in at -4.9% from -15.7% prior. Meanwhile, Japan’s December trade balance further contracted to -152.5 billion from -85.2 billion, exceeding projections of -150.0 billion.
The steep climb towards its resistance isn’t fazing the determination of USDCAD bulls. After a steep decline in the last few trading of December 2019, investors are looking to buoy the pair, erasing the major gains of the Canadian dollar against the US dollar. Bulls are holding on the upward momentum despite weak results from the United States economy, betting on the safe-haven appeal of the buck and taking advantage of the also faltering Canadian economy. Just recently, the Bank of Canada announced its official interest rate decision for the first month of the new decade. Prior to the announcement, it was already expected that the bank will leave its official rates at 1.75%, and so they did, thus failing to give the Canadian dollar a boost. Meanwhile, Ottawa’s core consumer price index for December further contracted from -0.2% to -0.4, causing ripples of concerns that reached investors and the country’s currency.
Australia’s economy recently reported a strong set of results from December, however, the current turbulence faced by the country, the raging bushfires, are opening the floor for bears to pull the pair lower. Aside from that, the gradual improvement from Switzerland’s economy is attracting move investors to the Swiss franc. Not to mention, the epidemic that’s spreading across China is also adding shine to the safe-haven appeal of the franc. However, today, bears momentarily lose their momentum, opening the way for bulls to recover some of their losses against the franc. Perhaps the recently released employment results from Australia gave way for bulls to have some breathing space. Yesterday, the Australian Bureau of Statistics reported better-than-expected figures from the country’s labor force. Unfortunately, the pair is still expected to climb down to its support bye early of mid-February as the bushfires will dent January’s economic activity.
The British pound to New Zealand dollar pair remains on track to reach its resistance by the first week of February, perhaps even earlier than that. The kiwi remains under pressure against the pound as New Zealand’s economy shows consecutive contractions according to official reports. The outbreak of the coronavirus in China and some parts of Asia that’s putting pressure on the Chinese government and the economy could affect the kiwi. Meaning, it could weigh on the risk-sensitivity of the New Zealand dollar. However, the kiwi is fighting hard and is doubling its effort to prevent the British pound from running away against it. However, the strong November employment change and claimant count change from Britain, which was recently reported, are backing up the beloved sterling. Aside from that, the improvements in the public and industrial sectors of the UK adds support to the GBPNZD pair in the market.