Week ending 6 February 2009: Another round of mixed data saw investors developing tougher hides this forex trading week, ending in increased risk appetite benefiting mainly the commodity and higher-yielding currencies.

As expected, the RBA slashed rates by 100bps to 3.25%, easing 400bps since September. December new home sales fell −1.7% m/m, building approvals −32.9% y/y, and the house price index in 4Q2008 −3.3% y/y. The December trade balance shrank to AU$589M although retail sales rose 3.8% in the month. AUD/USD spiked beneath support at 0.6340 and rose 3.5% through the week, including a 200-pip spurt on Friday as investors re-entered markets, closing at 0.6765.

The U.S. economy lost 598K jobs in January and the unemployment rate jumped to 7.6%, with data revisions indicating 3.6 million jobs lost since December 2007. PMIs surprised to the upside in January, with 35.6 manufacturing and 42.9 services, while December personal spending fell −1.0% and consumer credit shrank by US$6.6Bn. December pending home sales rose 6.3% m/m and February consumer confidence edged up to −52 from −54 previous.

As expected, the ECB held rates steady at 2.0% and intimated that the next important meeting would be the one in March. January PMIs printed 34.4 manufacturing and 42.2 services. December PPI dropped to 1.8% y/y, retail sales fell −1.6% y/y, and December German factory orders fell −25.1% y/y and industrial production −12.0%. EUR/USD rose, fell, and rose in the week, closing at 1.2925 for a gain of 1.1% although it could not penetrate resistance at 1.3070.

As expected, the BoE cut rates by 50bps to 1.0%, which was contrarily pound supportive. January PMIs registered slight gains, with 35.8 manufacturing, 34.5 construction, and services 42.5, although consumer confidence fell to 40 from 48 previous. December industrial production is down −9.4% y/y and manufacturing −10.2%. January PPI input printed 2.3% y/y with output at 3.5% and output core 4.1%, while the HBOS January house price index rose 1.9%, the first gain in twelve months. GBP/USD rose through support-turned-resistance at 1.4550, closing comfortably above that level at 1.4805, gaining four days out of five this forex trading week. EUR/GBP fell in tandem, continuing the downtrend begin the final week of January, best seen on daily charts, closing at 0.8727.

The Canadian economy lost −129.0K jobs in January and the unemployment rate rose to 7.2% as the Ivey PMI fell to 36.1. USD/CAD rose on Canadian jobs data and fell on that from the U.S. to trade roughly flat for the week, closing at 1.2250, the only commodity currency not to gain on Friday. AUD/CAD benefited strongly from improved sentiment, recovering much of the ground lost in the previous two weeks to close at 0.8288.

The New Zealand unemployment rate in 4Q2008 rose to 4.6% and January’s commodity price index fell another −4.3%. NZD/USD also rose strongly on Friday, closing just beneath resistance at 0.5326, and AUD/NZD rose in choppy trading to 1.2688.

Japan’s December leading index printed 79.8 from 81.3 previous and January vehicle sales fell −27.9% y/y. USD/JPY surged at week’s end to close at 92.01. EUR/JPY spiked beneath support at 113.60 then rose into the upper half of its trading band, closing at 118.91, and AUD/JPY followed, closing at 62.25.