Market Roundup
- BoJ Harada – Guardedly optimistic on growth, China/EM concerns, should ease further if overseas risks hurt jobs, prices to accelerate by FY-end.
- BoJ Gov Kuroda – Price expectations of households-companies changing sharply, delay in achieving price goal due to energy price falls, to proceed with QQE to hit 2% price goal, half-way there.
- Japan business mood dips as economy seen in recession, Nov Reuters Tankan mfg index +3, lowest since April ’13, non-mfg index +22, lowest since March, Oct +7 and +27, mfg index seen unchanged in February, non-mfg index +21.
- Japan Oct money supply M2 +3.6% y/y, M3 +2.9%, broadest liquidity +3.9%.
- China SAFE – Q3 prelim current account surplus $63.4 bln, capital/financial account deficit $63.4 bln, deficit ballooned on investment outflows.
- Chicago Fed Evans – Looking forward to time when Fed can raise rates, return to normal balance sheet, clarity on Fed objectives important, some public concern on Fed achieving 2% inflation goal.
- Minny Fed Kocherlakota won’t participate in December FOMC meeting.
- US Republican presidential candidates accuse Fed of playing politics.
- Australia Nov consumer sentiment +3.9% to 101.7, highest since May Oct 97.8.
- RBNZ FSR – Recent NZD significant buffer for economy, responded to increased money market volatility by increasing participation, China-dairy slowdown to have major economic impact, scope for monetary easing.
Economic Data Ahead (GMT)
- 07:00 Sweden Oct Unemployment; last 7.8%.
- 09:30 UK Oct Claimant Count, 1.5k expected; last 4.6k.
- 09:30 UK Oct ILO Unemployment, 5.4% expected; last 5.4%.
- 09:30 UK Oct Average Earnings 3-month average, +3.2% y/y expected; last +3.0%.
- 09:30 UK Oct – ex-bonus, +2.7% y/y expected; last +2.8%.
- 12:00 US w/e Mortgage Market Index; last 414.2.
Key Events, Auctions Ahead (GMT)
- US Veterans’ Day/Canada Remembrance Day holidays, markets closed.
- N/A BoE London Open Forum, Gov Carney, ECB Pres Draghi to speak.
- N/A Riksbank non-rate setting executive board meeting.
- N/A Sweden SEK2 bln each 1.5% and 2.5% 2023 and 2025 govt bond auctions.
- N/A Norway NOK3 bln 2% 2023 NST-475 government bond auction.
- N/A Italy E6 bln 12-month BOT auction.
- 07:45 Buba Dombret speech in Frankfurt.
- 09:30 Germany E3 bln 0.25% 2020 Bobl auction.
- 12:00 ECB VP Constancio at EU-LATAM central bank dialogue in Madrid.
- 16:00 BoS Gov Linde, ECB Constancio press conference.
- 19:00 BoI Visco speech at London business economists’ dinner.
FX BeatUSD: With the euro under pressure, the dollar index broke back above its post-payrolls high of 99.345 to scale a fresh seven-month peak of 99.504. Against the yen, the greenback fetched, easing from a 2-1/2 month peak of 123.60 set on Monday. The euro was left flirting with 132.11, having come within a whisker of a six-month trough of 131.45 plumbed on Friday.EUR/USD: The euro was under pressure in Asian session amid political uncertainty in Portugal and worries on China’s industrial output and retail sales data. It was trading at $1.0758, recovering after dropping below $1.0700 for the first time in over six months overnight. The pair opened in Asia at 1.0724, and recovered from 1.0674 fresh 7-month low. Some sales were noted at 1.0765 with a downward bias, a break above 1.0770 targets former support at 1.0800-20. USD/JPY: The pair faces strong support around 122.50 and has retreated till 122.71 after making a high of 123.60. Short term trend is bullish as long as support 122.48 holds, any break below 122.48 will drag the pair till 121.99/121.80 in short term. On the higher side major resistance is around 123.60 and break above targets 124.13/124.50. Overall bullish invalidation is only below 121.80.GBP/USD: Cable jumped in Asia from 1.5118 to 1.5186 on broad USD weakness. Markets eye on UK jobs data, which could define short-term direction. EUR/GBP was steady between 0.7026-79, holding above yesterday’s 0.7068 low.USD/CNY: China’s yuan was almost flat against the dollar after the central bank set a nearly flat midpoint rate. The People’s Bank of China set the midpoint rate at 6.3614 per dollar prior to market open, 0.02 percent weaker than the previous fix 6.3602. The spot market opened at 6.3601 per dollar and was changing hands at 6.3624 at midday, only 0.01 percent weaker than the previous close. Offshore yuan was trading 0.44 percent weaker than the onshore spot rate at 6.3902 per dollar. AUD/USD: The Australian dollar stumbled above one-month lows as investors braced for another batch of economic data out of China. It stood at $0.7044, having traded in a narrow band of $0.7016-$0.7070 in the last three sessions. The pair opened in Asia at 0.7030, trades up from 0.7026 to 0.7079. AUD shorts were being bought back in line with broad USD weakness. Resistance of 0.7070 is tested, markets relatively thin ahead of US holiday tonight.NZD/USD: The New Zealand dollar held at $0.6557, having been stuck in a thin band between $0.6500 and $0.6566 since Monday. Strong support was found at 65 cents, a level tested three times in as many sessions. Partial holidays in Europe, holidays in US/Canada dampened interest.USD/CAD: The Canadian dollar was little changed against the greenback on Tuesday, caught between a modest pick-up in oil prices and a stronger U.S. dollar on growing expectations the Federal Reserve will begin raising interest rates this year. It ended the North American session at C$1.3265 to the greenback, or 75.39 U.S. cents, slightly firmer than the Bank of Canada’s official close of C$1.3275, or 75.33 U.S. cents on Monday.Equities RecapAsian shares inched lower on Wednesday as worries increased ahead of another batch of Chinese data, while strength in the U.S. dollar kept the screws on global commodity prices.The CSI300 index fell 0.5 percent, while the Shanghai Composite Index eased 0.3 percent. Japan’s Nikkei slipped 0.1 percent, though that follows a run of strong gains. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat after touching a fresh one-month low. Bourses in South Korea and Taiwan lost ground.Treasuries RecapBenchmark 10-year US Treasury yields dropped a couple of basis points to 2.34 percent, but remain hostage to the chance of a Fed rate hike next month.New Zealand government bonds rose, sending yields 4 basis points lower at the long end of the curve. Australian government bond futures bounced off three-month lows, with the 3-year bond contract up 1 tick at 97.960. The 10-year contract added half a tick to 97.0850, while the 20-year contract was steady at 96.5450. The yield spread between the benchmark UK 10-year gilt and equivalent Bund widened by around 7 basis points to 141 points, its highest since last Thursday, just before the BoE released its quarterly economic outlook.Canadian government bond prices were higher across the maturity curve, with the two-year price was up 2.5 Canadian cents to yield 0.66 percent and the benchmark 10-year rising 9 Canadian cents to yield 1.708 percent.Commodities RecapU.S. crude oil prices fell in Asian trading on Wednesday after industry data showed an increase in U.S. stockpiles, while fears that Japan’s economy may have fallen into recession added to demand woes. Benchmark U.S. crude futures slipped to a 2-week low at $43.55 a barrel in early trading before edging back up to $43.73 a barrel at 0233 GMT, still down almost half a dollar from their last close. Brent crude futures were down 28 cents at $47.16 a barrel.Gold inched up as the dollar pared some of its recent gains, but the metal remained under pressure near a three-month low as outflows from bullion funds and an anticipated U.S. rate hike weighed on the market. Spot gold rose 0.2 percent to $1,091.70 an ounce by 0358 GMT.
The material has been provided by InstaForex Company – www.instaforex.com