Market Roundup
- India Nikkei/Markit Services PMI slumps to 50.1 in November (53.2 Oct) a Five-Month Low
- Japan Nov PMI services 51.6, Oct 52.2, growth in new business moderates.
- China Nov Caixin PMI services 51.2, Oct 52.0, new business down.
- Australia Nov AIG PSI -0.7 pt to 48.2, further into contraction.
- Australia Oct trade deficit A$3.305 bln, A$2.665 bln forecast.
- Australia Oct HIA new home sales -3.0% m/m.
- Australia Nov vehicle sales strong, +4.6% m/m, +3.9% y/y, set for record '15.
- New Zealand Q3 residential bldg work +2.9% q/q, non-residential -2.6%.
- Opponents of ECB stimulus could lead to watered-down QE plan - FT.
- ECB to drive policy further into uncharted territory - Reuters.
- Abe administration official sees need for further BoJ easing - DowJones/WSJ.
- Japan fiscal '16 budget least debt reliant in 9 yrs, spending @Y97 trln, highest ever, tax revenue @Y57 trln, 2/5-yr JGB issuance may be cut, Tokyo FY '16 growth @3% forecast, non-mfg hikes CAPEX plans 3.9% in H1 - Nikkei.
- MoF flow data week-ended Nov 28 - Japanese buy net Y52.9 bln foreign stocks, sell Y156.7 bln bonds, Y126.9 bln bills; foreign investors sell net Y54.6 bln Japanese stocks, buy Y217.6 bln bonds, trln bills.
- SF Fed Williams - Prefers rate hikes sooner than later, closer and closer to liftoff, will take few years to get rates up to normal - Reuters.
- Ex-BoC Dodge - Rate hikes likely a long way off - Reuters.
Economic Data Ahead
- (0130 ET/0630 GMT) France Q3 ILO unemployment; last 10.3%.
- (0230 ET/0730 GMT) Sweden Nov PMI services, 57.0 forecast; last 57.5.
- (0315 ET/0815 GMT) Spain Nov PMI services, 56.6 forecast; last 55.9.
- (0345 ET/0845 GMT) Italy Nov PMI services, 54.0 forecast; last 53.4.
- (0350 ET/0850 GMT) France Nov PMI services, 51.3 forecast; flash 51.3.
- (0350 ET/0850 GMT) France Nov PMI composite - final; flash 51.3.
- (0355 ET/0855 GMT) Germany Nov PMI services, 55.6 forecast; flash 55.6.
- (0355 ET/0855 GMT) Germany Nov PMI composite - final; flash 54.9.
- (0400 ET/0900 GMT) Norway Nov housing prices; last +5.6% y/y.
- (0400 ET/0900 GMT) Eurozone Nov PMI services, 54.6 forecast; flash 54.6.
- (0400 ET/0900 GMT) Eurozone Nov PMI composite, 54.4 forecast; flash 54.4.
- (0430 ET/0930 GMT) Great Britain Nov PMI services, 55.0 forecast; last 54.9.
- (0500 ET/1000 GMT) Eurozone Oct retail sales, +0.2% m/m, +2.7% y/y forecast; last -0.1%, +2.9%.
- (0730 ET/1230 GMT) United States Nov Challenger layoffs; last 50.5k.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 268k forecast; last 260k.
- (0945 ET/1445 GMT) United States Nov Markit PMI services - final; flash 56.5.
- (0945 ET/1445 GMT) United States Nov Markit PMI composite - final; flash 56.1.
- (1000 ET/1500 GMT) United States Oct factory orders, +1.4% m/m forecast; last -1.0%, ex-transport -0.6%.
- (1000 ET/1500 GMT) United States Nov ISM PMI non-mfg, 58.0 forecast; last 59.1.
Key Events Ahead
- N/A Sweden NDO SEK700/300 mln 1.0/0.125% 2025/32 inflation-linked bond sales.
- (0130 ET/0630 GMT) Bank of Japan Policy Board Kiuchi speaks at Tokyo capital markets forum.
- (0200 ET/0700 GMT) Riksbank DepGov Jansson speech at Stockholm breakfast event.
- (0330 ET/0830 GMT) Riksbank DepGov Ohlsson speech at Stockholm seminar.
- (0400 ET/0900 GMT) Latest Statistics Norway economic forecasts.
- (0430 ET/0930 GMT) Spain E3-4 bln 1.15/2.15/1.95% '20/25/30 Bono, 1.8% '24 Bono-ei auctions.
- (0450 ET/0950 GMT) France E3.5-4.5 bln 2.25/4.75/4.5% 2024/35/41 OAT auctions.
- (0515 ET/1015 GMT) Norges Bank Gov Olsen speech at Kristiansund conference.
- (0745 ET/1245 GMT) ECB policy announcement, 10 bp depo rate cut to -0.3%, unch refi forecast.
- (0830 ET/1330 GMT) ECB Pres Draghi press conference.
- (0840 ET/1340 GMT) Cleveland Fed Mester speech at Washington, DC conference.
- (1000 ET/1500 GMT) FOMC ChairYellen JEC Congressional testimony.
- (1310 ET/1810 GMT) Cleveland Fed Mester/FOMC ViceChair Fischer speak at Washington luncheon.
FX Beat
USD: The greenback advanced to a 12-1/2-year high of 100.51 against a basket of major currencies on Wednesday following Yellen's hawkish comments and the upbeat data. Against the Yen, the dollar rose to 123.68 yen a 2-week high, before paring gains as a big fall in oil prices prompted traders to ease off on riskier trades.
EUR/USD: The Euro dropped 0.2 percent to $1.0595 lingered near a 7-1/2-month low against the dollar as investors braced for the European Central Bank to roll out monetary easing measures, enhancing the U.S. currency after it scaled new heights on the prospect of a Federal Reserve rate hike.
USD/JPY: The pair is back from 123.68 high overnight, profit-taking seen at highs, pushing it lower. Techs inconclusive - hourly Ichi kijun-tenkan 123.25/39, daily tenkan 122.97. Strong support is seen at 122.90 (21 DMA), while resistance on the upside lies at 123.65 (Daily High Nov 19). U.S. ADP data boded well for Friday's jobs report, easing concerns sparked by a soft U.S. manufacturing data on Tuesday.
AUD/USD: The Aussie dropped 0.3 percent to $0.7286 after the country posted unexpected trade deficit, though it remained within a 7-week high of $0.7345 as support was found at $0.7250. The Antipodeans came off multi-week peaks on Thursday after hawkish Yellen comments underlined the case for an interest rate hike this month and dented appetite for risk assets. Aussie's resilience was seen as it remained little changed on China Caixin services PMI data which dropped to 51.2 in Nov from 52 month prior. Daily RSI diverges to suggest the rally may be stalling, long upper wick formed on yesterday's candle shows selling pressure at highs, Stochs also show a bearish crossover at overbought levels. Support was found at 0.7250 10-DMA, break below opens to 0.7222 Dec 1st base, while resistance on the upside is seen at 0.7316 Oct 14 highs.
NZD/USD: Kiwi reversed a part of yesterday's losses and ticks higher in Asia, completely ignoring the weakness in the Asian stocks. The New Zealand dollar dropped to $0.6628, after rising as high as $0.6681 on Wednesday, as the U.S. dollar strengthened on strong employment data. The pair edged down to 0.6628 on Thursday, after rising as high as 0.6680 the previous day. Uptrend in the Kiwi for the week is intact, boosted in part by stabilising dairy prices seen at a global dairy auction, RSI and Stochs on weeklies biased higher. The pair's inability to hold above the daily cloud top also highlights downside, 0.6658 (Daily cloud top) and 0.6614 (Dec 2 low) are immediate resistance and support levels.
EUR/AUD: The pair was up +25pts in Asia on AUD led weakness after Australia's trade deficit widened to A$3.3 billion, compared to forecasts of A$2.6 billion. The pair could not hold on to gains, has slipped lower and is currently trading at 1.4482 after hitting session highs at 1.4562. Immediate resistance is seen at 1.4632 (10 DMA) ahead of 1.4785 (61.8 % Fibo of 1.3677 to 1.6584 (Apr - Aug) rise), while supports on the downside are seen at 1.4413 (Dec 2 low) and then 1.4360 (76.4 % Fibo of 1.3677 to 1.6584 rise)
GBP/JPY: The pair has broken major support 184.40 and closed below that level yesterday. It is currently trading around 184.06. Short term trend is weak as long as resistance 185.25 holds. Major support -184.40 (trend line joining 180.66 and 184.25). Any break above 185.25 will take the pair to next level 185.60/186. On the downside support is around 183.80 and break below targets 182.75/181.80
USD/CAD: The Canadian dollar rose 0.4 percent to 1.3293 to the dollar after oil prices advanced on report that Saudi Arabia will propose a deal to balance oil markets.
USD/CHY: The offshore yuan was trading 0.72 percent weaker than the onshore spot at 6.446 per dollar. It hit an 8-1/2 month high on Wednesday after hawkish comments from U.S. Fedearl Reserve Chair Janet Yellen to reinforce an interest rate hike later this month.
Equities Recap
Asian shares slipped as the dollar continued to advanced after hawkish comments from Federal Reserve Chair Janet Yellen to reinforce the case for an interest rate hike later this month.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent after Yellen's comments and falling crude prices that hit energy shares. With Caixin/Markit Purchasing Managers' Index showing growth in China's services sector in November, the Shanghai shares were last up 0.1 percent.
Australia's S&P/ASX 200 Index closed down 0.42 Pct at 5,236.00 points, while Nikkei closed up 0.01 pct at 19,939.90 with Seoul shares down at 0.72 pct.
Commodities Recap
Gold slipped to a near-six-year low on Thursday after comments from Federal Reserve chair Janet Yellen, while the strength in the dollar also pressured the metal. Spot gold dropped 0.2 percent to $1,051.26 an ounce by 0307 GMT and the U.S. gold futures edged down to $1,045.40, the lowest since October 2009.
U.S. crude edged up 0.5 percent at $40.13 a barrel after tumbling 4 percent overnight on an unexpected rise in stockpiles, while Brent was up 23 cents at $42.72. Crude was still capped with OPEC widely expected not to opt for a production cut at Friday's meeting despite a global supply glut.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.194 percent versus Wednesday close of 2.178 percent.
Australian government bond futures dropped, with the 3-year bond contract off 1 tick at 97.890 and the 10-year contract eased 3 ticks to 97.1400, while the 20-year contract was steady at 96.6500.
New Zealand government bonds gained, sending yields 1 basis point lower along the curve.
Canadian government bond prices were lower across the maturity curve, with the 2-year price down 4.5 Canadian cents to yield 0.619 percent and the benchmark 10-year falling 21 Canadian cents to yield 1.515 percent.
