Week ending 9 January 2009: The first full week of trading for the year found many currency pairs seeking new balances as liquidity normalises, with ranges remaining generous.

Australia’s November retail trade grew by 0.4% m/m with trend registering 0.1%, while dwelling approvals fell −12.8%, 34.7% y/y, and the trade surplus narrowed to AU$1.45Bn, significantly below market expectations. AUD/USD pushed above resistance at 0.7050 early in the week and climbed to 0.7267 before risk aversion from poor U.S. payroll data pushed the pair down to close beneath the original level at 0.7023.

U.S. non-farm payrolls lost −524K jobs in December with the unemployment rate rising to 7.2%. November construction spending fell −0.6% m/m, pending home sales −4.0%, and factory orders −4.6%. Interestingly, November consumer credit dropped US$7.9Bn, the third fall in four months and the largest on record, as U.S. households pay down debts without incurring fresh ones.

The ECB meets 15 January and is universally expected to cut rates between 25–50bps. November Eurozone retail sales are down −1.5% y/y, −3.0% in Germany, and the unemployment rate rose to 7.8%. The first estimate of December CPI printed at 1.6%, while PPI for November fell to 3.3% y/y from 6.3% previous. Sentix investor confidence unexpectedly rose to −34.4 from −42.3 previous although German factory orders are down −27.2% y/y. Bilateral weak fundamental data pushed EUR/USD between resistance at 1.3775 and support at 1.3375 in a rangetrading week.

The BoE met 8 January and cut rates by50bps to 1.5%, an historic low. November industrial production is down −6.9% y/y and manufacturing production −7.4%, while December PPI input printed at 4.3% y/y and output 4.7%, with core output 5.0%. December PMI registered 29.3 construction and 40.2 for services. Nationwide house prices are down −15.9% y/y and consumer confidence fell further, to 47. Although GBP/USD rose 4.8% this week, on daily charts the trend remains gently bearish, with each week’s low slightly lower than before. GBP/EUR was not subtle, falling 8% in the week with profit-taking on Wednesday and only briefly respecting support from the MA-200 before closing at 0.8852.

Canadian unemployment rose to 6.6% in December with 34.4K jobs shed and the Ivey PMI fell to 39.1. November’s raw materials price index fell −13.4% m/m while the previous month was revised down to −12.9%. USD/CAD fell into the lowest level of its 1.1800–1.3000 trading range, best seen on daily charts, while AUD/CAD reversed its holiday uptrend and settled back into its previous consolidation range below 0.8482.

The New Zealand trade balance printed a deficit of NZ$520Mn in November. Electronic card transactions decreased −2.8% m/m and the ANZ commodity price index fell −7.4% for the second consecutive month. USD/NZD continued the uptrend initiated Christmas Eve at 0.5675, best seen on four-hour charts, although resistance at 0.6025 held, while AUD/NZD could not hold gains past 1.2180 and closed at 1.1892.

Japan’s leading index for November slipped to 81.5 and December’s vehicle sales are down −22.3% y/y. The yen continues to dominate trading. USD/JPY could not hold gains and closed down for the week at 90.23. EUR/JPY broke beneath strong support at 125.75, and AUD/JPY rose above then crossed beneath 64.75, closing at 63.37.