• EURUSD slides heavily following a record slump in German retail sales data
• CME raises margin on silver futures in response to volatility
• NZD and AUD on the watch for New Zealand’s job report and Australia’s rate decision
A sinking Euro helped push USD higher after German retail sales released with unexpected disappointment. Figures show that, sales grew at -9.6% in December, well below the consensus of 2.6%. The significant contraction raises further concerns over the health of economy and is also the largest fall in history on record. EURUSD ticked down 0.64% during Monday’s trading sessions and DXY index climbed above 91. With Merkel recently extending the lockdown measures until mid-February at least, there seems to be little chance for the retail sales to recover in the first quarter of 2021.
In commodities market, XAGUSD is on the watch. Financial media has been hyping silver as the retail crowd’s next big trade following the Gamestop maniac and now it seems that at least the media has confirmed silver to be the next Gamestop. Silver prices rose to the highest level in nearly a decade as the precious metal moved to the speculative sights. As a response, CME raised COMEX Silver Futures margin by 18% to $16,500 per contract from $14,000. Higher margin means that traders need to keep more collateral to hold their positions, potentially lowering the volatility by limiting activity from certain retail traders.
Investors on the Kiwi are looking closely on the upcoming Q4 employment data of New Zealand which is set to be released on Wednesday morning. A worse-than-expected figure may increase the likelihood for RBNZ to raise monetary support. In Australia, RBA will also draw close attention through rate decisions. It is widely expected that benchmark interest rate will be held at 0.10%. No change on the amount of QE is on the radar. Prime Minister Scott Morrison recently made a hawkish comment suggesting that, a fiscally disciplined approach is important. This has led to the belief that, the amount of fiscal stimulus into the market will likely be limited.