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New Zealand Dollar Research Report

Published: Tuesday 22 December 2015

US markets came under pressure yesterday as retail sales raised less than expected for November and Fiscal Cliff negotiations seem to have reached stalemate. Retail sales rose 0.3% last month, disappointing the market that had expected a figure of 0.5%. This is key retail sales figure as it includes the Thank Giving Holiday and black Friday. Whilst posting a smaller than expected gain, the figures are likely to have been impacted by Hurricane Sandy and heavy holiday discounting by retailers. White House spokesman Jay Carney blamed the GOP for not budging on "the fundamental issue". He said the GOP has not shown "any difference in the stated position by the speaker of the House when it comes to revenue." The Republicans, however, said that the Democrats "only moved backwards since the beginning". The negotiation is now in a deadlock as Boehner returned home to Ohio for the weekend. At the press conference of the December FOMC meeting, Fed Chairman Ben Bernanke expressed his concerns over the fiscal cliff and indicated that the Fed would not be able to avert the crisis if the White House and the Republicans failed to agree on a deal. He also warned that, "Clearly the fiscal cliff is having effects on the economy".
FXstreet.com (Córdoba) - The Rating agency Standard and Poor's decided on Thursday to put UK's AAA rating on negative outlook from stable.

S&P expects the government debt/GDP ratio to rise in 2015 before declining. The agency also said the employment or growth shocks could pressure further the government finances.

This confirms a negative view that Moody's and Fitch have already announced on the UK, putting the country's AAA rating in jeopardy
The HSBC manufacturing PMI rose to a 14-month high of 50.9 in December, up from November's 50.5. Also, that's the fifth straight month of gain. HSBC said that the recent surveys showed that "ongoing growth recovery is gaining momentum, mainly driven by domestic demand conditions". Nonetheless, it also mentioned that “the drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds." Also, it noted that "calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign".

Over the Christmas period with the majority of traders and market participants away there’s much thinner trading volumes which can mean increased volatility and we always recommend placing limit orders over the next 2 weeks to take advantage of any favourable moves in the exchange rate. Your Halo FX consultant will be happy to suggest levels if you’re keen.

Data Releases

10:00 EUR Eurozone Employment Q/Q Q3 0.00% 0.00%
10:00 EUR Eurozone CPI M/M Nov -0.20% 0.20%
13:30 CAD Manufacturing Shipments M/M Oct 0.00% 0.40%
13:30 USD CPI M/M Nov -0.20% 0.10%
14:15 USD Industrial Production Nov 0.20% -0.40%
14:15 USD Capacity Utilization Nob 78.00% 77.80%

FX Research and analysis by Tom Ives

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