Exchange rates and converters

The dollar corrected some after posting fresh highs against most currencies. EUR-USD logged a fresh 11-year low at 1.1098, subsequently rebounding above 1.1200. In Greece, the opposition party Syriza won the Sunday election, putting the austerity programs in doubt. We think the ECB QE program should keep a lid on contagion in Eurozone markets, but investors will be keeping close tabs on how things unfold in Athens in the period ahead, with 'Grexit' concerns likely to heighten.

          The following economic releases will have a disproportionate impact on trading in the coming week.

Monday

Japanese CGPI: Although Japanese prices ramped up after the BOJs initial monetary policy actions, they have since stalled in their advancement.  The CSPI is no exception, as shown in this chart from the latest release:

Monthly December reports reported in the last week were highlighted by the index of Leading Indicators, up +0.5. Housing starts were up slightly, while housing permits were down slightly.  Existing home sales were up.  All three housing reports were positive YoY.  

I look at the high frequency weekly indicators because while they can be very noisy, they provide an up-to-this-week snapshot of the economy.  The indicators will confirm a trend or indicate a switch in trend well before monthly reports, and are a way to mark one's opinions to market on a regular basis.

The dollar rallied to new highs against the euro in early N.Y. trade on Friday, touching 1.1115 lows before rallying sharply on the back of a solid round of pre-weekend short covering. The pairing hit 1.1289 highs into the London close, before drifting back into 1.1220. The euro remains in sell the rally mode, though given the sharp losses seen since the ECB meeting, position paring did not come as a total surprise. Elsewhere, USD-JPY again failed to hold the 118 handle, as soggy stocks, and ongoing Japanese selling over the figure weighed.