Market Roundup
- BoJ DepGov Iwata - China-EM slowdown affecting Japan exports-output, downside risks to remain high for now, positive economic cycle intact though, price trend improving steadily, target to be hit latter half FY '16, ready to adjust policy without hesitation if underlying inflation trend deteriorates.
- Japan end-November monetary base trln, +30.8% y/y.
- Fed Gov Brainard - Calls for cautious-gradual approach to rate hikes, room to respond with both rates-balance sheet moves if inflation rises faster than expected, some slack but labor market puzzle - Reuters.
- US Nov total vehicle sales 18.19 mln AR, +1.4% y/y at 1.32 mln units, Oct 18.24 mln, on pace for record '15, Toyota outsells Ford.
- UK Nov BRC shop prices -2.1% y/y, weakest reading on record, Oct -1.8%.
- RBA Gov Stevens - Growth respectable given scale of mining cycle, moderate growth to continue, AUD swings helped avoid damaging inflation, no further guidance on rates, low now but could go lower if needed - Reuters.
- Why GDP means RBA can't afford to chill over AUD - Jacob Greber, Australian.
- Australia Q3 GDP +0.9% q/q, +2.5% y/y, +0.8% and +2.4% forecast, Q2 rev +0.3% q/q (prelim +0.2%), gross fixed CAPEX -4.0%, chain price index -0.2%, export boost, consumer spending up.
- NZ Fonterra GDT price index +3.6% at last auction, rebound after falling for three straight auctions, volumes off.
Economic Data Ahead
- (0330 ET/0830 GMT) Sweden Q3 current account balance; last SEK58.4 bln surplus.
- (0400 ET/0900 GMT) Norway Q3 current account balance; last bln surplus.
- (0430 ET/0930 GMT) Great Britain Nov construction PMI, 58.2 forecast; last 58.8.
- (0500 ET/1000 GMT) Eurozone Nov inflation - flash, +0.2% y/y forecast; last +0.1%.
- (0500 ET/1000 GMT) Eurozone Nov - ex-food/energy - flash, +1.0% y/y forecast; last +0.9%.
- (0500 ET/1000 GMT) Eurozone Oct producer prices, -0.4% m/m, -3.2% y/y forecast; last -0.3%, -3.1%.
- (0815 ET/1315 GMT) United States Nov ADP national employment, +190k forecast; last +182k.
- (0830 ET/1330 GMT) United States Q3 productivity - revised, +2.2% AR forecast; last +1.6%.
- (0830 ET/1330 GMT) United States Q3 unit labor costs - revised, +1.1% AR forecast; last +1.4%.
- (0945 ET/1445 GMT) United States Nov ISM New York sentiment, biz conditions indices; last 705.3, 65.8.
Key Events Ahead
- N/A UN COP 21 conference in Paris (till December 11).
- (0400 ET/0900 GMT) Bank of England Moulder speech at London Westminster Business Forum.
- (0420 ET/0920 GMT) Bank of Japan Gov Kuroda speech at Sendai (northern Japan) event.
- (0530 ET/1030 GMT) United Kingdom DMO bln 1.5% 2021 Gilt auction.
- (0810 ET/1310 GMT) Atlanta Fed Lockharty speaks in Ft Lauderdale, Florida.
- (0830 ET/1330 GMT) FOMC Chair Yellen speech at WDC event/17:00 Economic Club speech.
- (0900 ET/1400 GMT) Fed Gov Tarullo speech in Arlington, Virginia.
- (1000 ET/1500 GMT) Bank of Canada policy announcement, no change in 0.5% overnight rate forecast.
- (1120 ET/1620 GMT) Bank of England Finch speech in London.
- (1300 ET/1800 GMT) Buba Thiele speech in Berlin.
- (1400 ET/1900 GMT) Fed Beige Book.
- (1540 ET/ 2040 GMT) SF Fed Williams speech in Portland, Oregon.
FX Beat
USD: The greenback was trading near multi-month highs on Wednesday, recovering from the levels after data showed U.S. manufacturing contracted in November for the first time in 3 years. The dollar index climbed up about 0.1 percent to 99.894, after dropping below an 8-1/2-month high of 100.310 set on Monday. Against the yen, the dollar climbed up to 123.03 yen falling back toward Monday's high of 123.34.
EUR/USD: The single currency popped above 1.0600 against the US dollar, rebounding from a 7-1/2-month trough of 1.0557. It was last trading at 1.0612, further upside may be limited ahead of the European Central Bank's policy review on Thursday. To the upside, the strong resistance can be seen at 1.0648, a break above this level would take the pair towards next resistance level at 1.0688 levels. On the flipside, immediate support can be seen at 1.0601 (5 DMA), a break below this level will open the door towards next level at 1.0578.
AUD/USD: The Australian dollar climbed to a 7-week high of $0.7345 after data showed economic growth last quarter, supporting views that interest rates will not be cut in the near term. It was last at $0.7314, having risen 1.6 percent in three sessions. The Aussie gained a 5-month peak against the euro and pound, while it rallied to its highest level since August against the yen. Both Antipodean currencies rallied more than 1 percent against the greenback. With momentum already on its side, the Aussie was supported aftre the RBA on Tuesday skipped a chance to cut interest rates or talk down the currency afresh. The pair closed above trendline resistance (0.7285) in yesterday's trade, but uptrend lacks conviction, the pair was rejected at highs on the day at 0.7342 and has edged lower to currently trade at 0.7316. A break of trendline resistance at 0.7285 brings the 200 DMA at 0.7467 into scope for a more convincing case of a correction of the trend, selling pressure at highs raises a case for resumption in a sell-off in the nearterm.
NZD/USD: The New Zealand dollar rose to a 1-month peak of 0.6690 against the Greenback, buoyed by rising global dairy prices which showed a bounce after three consecutive falls at a fortnightly auction held early Wednesday morning, Strong resistance for the pair is seen at 0.6700 and 0.6730. Momentum is higher, suggests these will be tested. At the time of writing NZD/USD is trading at 0.6661 with immediate resistance located at 0.6688 (Dec 1st highs) and support at 0.6602 (5 DMA).
USD/JPY: USD was broadly weaker across the board after data overnight showed U.S. manufacturing contracted in November for the first time in three years. Against the yen, the greenback edged lower to 122.83 from Monday's high of 123.34. USD/JPY remained in consolidation mode, day's range 123.08/122.82. Strong support for the pair is seen at 122.30 (Double bottom - Nov 27 & 24 Low), while immediate resistance is seen at 123.26 (Nov 23rd high).
USD/CAD: Investors dumped the Canadian dollar overnight after the country's economic activity in September fell by a worse-than-expected 0.5 percent. The loonie dropped to a 1-1/2-week low of C$1.3398 per USD, but has since recovered to currently trade at C$1.3374. The pair has tested and bounced off trendline support multiple times, trend is definitely higher. Immediate support is seen at 1.3325 (trendline), while resistance on the upside lies at 1.3393 (Nov 30 highs)
Equities Recap
Asian stock markets wavered after U.S. manufacturing data raised questions about how the Federal Reserve would be when hiking interest rates, while the dollar retreated from 8-1/2-month highs.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent. Shanghai shares gained 0.8 percent while Hong Kong's Hang Seng gained 0.5 percent. Indonesian and Singaporean shares also edged up.
Australia's S&P/ASX 200 Index ended down 0.14 pct at 5,258.90 points while Nikkei closed down 0.37 pct at 19,938.13 with Seoul Shares ended down 0.61 pct.
Commodities Recap
Gold was steady after gaining from a 2-day rally, supported by short covering following a drop in the dollar after soft U.S. manufacturing data. Spot gold was stable at $1,068.40 an ounce by 0353 GMT.
Oil slipped down as an unexpected rise in U.S. stockpiles worsened oversupply concerns, stemming from expectations that OPEC will keep its output target unchanged at a policy meeting on Friday. Crude oil prices dropped on expectations that OPEC will not cut output to stem a supply glut when they meet later this week. U.S. crude dropped 0.5 percent at $41.64 a barrel and Brent lost 0.3 percent to $44.31 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield last stood at 2.1518 down by 0.066.
Australian government bond futures were mixed as the yield curve flattened. The 3-year bond contract was steady at 97.890, while the 10-year contract gained 4 ticks to 97.1700 with the 20-year contract edged up 4.5 ticks to 96.6850. The spread between 3 year and 10-year cash bonds dropped to 68 basis points, the thinnest since April.
New Zealand government bonds gained, sending yields down 4.5 basis points.
