Market Roundup
- RBA leaves OCR as is at 1.5% as eyed, policy consistent with growth-inflation targets, China economy has steadied but global growth below average, rising AUD could complicated transition, commodity price rises good for terms of trade, growth to slow before picking up again.
- Australia at risk of GDP contraction after disappointing data – Reuters.
- Australia Q3 current account balance in A$11.4 bln deficit, net exports impact on GDP -0.2%, A$13.7 bln def, zero impact eyed, Australia foreign debt A$1.05 trln, terms of trade bright spot, +4.5% and third highest on record, Q2 +2.3%.
- Australia Q3 government spending -0.2% to A$77.64 bln, investment -10.4%.
- Japan government to issue deficit-covering bonds of @Y1.9 trln to offset revenue shortfall this fiscal year – Reuters.
- Japan October total cash earnings +0.1% y/y, real wages unchanged, overtime -1.4%.
- Japan won't recognize China as WTO market economy - Nikkei.
- Japan tax reform to ease up on overseas shell companies – Nikkei.
- Rogue Chinese renminbi exchange rate raises eyebrows, apparently erroneous quote on Google would have represented an 8% devaluation – Financial Times.
- Xi Jinping to stop off at next Davos foru, first attendance by a Chinese president highlights global ambition - Financial Times.
- Fed officials - Trump should not spend like economy in crisis – Reuters.
- St Louis Fed Bullard – December rate hike reasonable, Trump policy impact unlikely to be felt for a year – Reuters.
- UK Nov BRC like-for-like retail sales +0.6% y/y, all sales +1.3%, Oct +1.7%, +2.4%, sales slower and cluster around Black Friday.
Economic Data Ahead
- (0315 ET/0815 GMT) China November CPI, -0.2% y/y eyed; last +0.1% m/m, -0.2% y/y.
- (0500 ET/1000 GMT) EZ Q3GDP revised, +0.3% q/q, +1.6% y/y eyed; prelim +0.3%, +1.6%.
- (0830 ET/1330 GMT) US Oct int’l trade balance, $41.8 bln deficit eyed; last $36.4 bln def.
- (0830 ET/1330 GMT) US Q3 productivity revised, +3.3% q/q AR eyed; prelim +3.1%.
- (0830 ET/1330 GMT) US Q3 unit labor costs – revised, +0.3% q/q AR eyed; prelim +0.3%.
- (1000 ET/1500 GMT) US October factory orders, +2.6% m/m eyed; last +0.3%, ex-transport +0.6%.
- (1000 ET/1500 GMT) US IBD/TIPP economic optimism index; last 51.4.
Key Events Ahead
- (0300 ET/0800 GMT) Eco Fin meeting in Brussels.
- (0400 ET/0900 GMT) Norway regional network survey, index last 0.75.
- (0430 ET/0930 GMT) ECB zero% 7-day refi, E33.5 bln allotment eyed, E35.9 bln maturing.
- (0445 ET/0945 GMT) Riksbank DepGov Floden speaks in Stockholm.
- (0530 ET/1030 GMT) UK DMO GBP2.5 bln 1.5% 2026 Gilt auction, EU Barnier speaks in London.
- (0600 ET/1100 GMT) NZ Fonterra dairy auction, GDT price index.
- (0630 ET/1130 GMT) ESM E1.5 bln 3-month bill auction.
- (1130 ET/1630 GMT) ECB Mersch speaks at Frankfurt conference.
- (1200 ET/1700 GMT) RBNZ Gov Wheeler parliamentary testimony on annual report.
FX Recap
USD: The dollar was little changed against a basket of six major currencies at 100.16, not far from Monday's low of 99.849, its lowest level since Nov. 15.
EUR/USD: The euro steadied on Tuesday, having bounced from a near 21-month low set the previous day after Italian Prime Minister Matteo Renzi's loss in a referendum over constitutional reform, an outcome that traders had widely expected. The euro eased 0.1 percent to $1.0757. On Monday, it ended up gaining 1 percent on the day, having bounced from a low of $1.0505 set in Monday's early Asian trade. Immediate support level is seen at $1.0657 and resistance was seen at $1.0796 level.
USD/JPY: The yen trades in narrow range against U.S. dollar. Pair made intraday high at 113.95 and low at 113.50 marks. A sustained close above 114.52 will take the parity higher towards key resistance at 115.26 marks. Alternatively, a daily close below 113.17 will tests key supports at 112.65 and 11.86 levels respectively.
GBP/USD: The Sterling hit fresh 2-month high at $1.2756 against U.S dollar on Tuesday and trading around $1.2750 marks. Pair made intraday high at $1.2754 and low at $1.2712 marks. Immediate support and resistance levels are seen at $1.2501 and $1.2860 marks respectively.
AUD/USD: The Reserve Bank of Australia ended Tuesday's meeting with rates at a record low of 1.5 percent following two easing this year, but conceded the annual pace of growth was set to slow. Governor Philip Lowe also dropped a reference to the economy growing at potential in his statement. The risk of a negative GDP number was enough to pull the local dollar down a quarter U.S. cent to $0.7450. The Aussie dollar had a soft tone at $0.7452, from $0.7477 early, having dipped to a trough of $0.7414 on Monday amid wild swings in the euro. Immediate support and resistance levels were seen at $0.7412 and $0.7497 marks respectively.
NZD/USD: The New Zealand dollar held steady at $0.7139, having reversed earlier gains. Yet, it was still some way off a trough of $0.7070 set on Monday when the country's Prime Minister announced his resignation. A sustained close above $0.7228 will drag the parity higher towards key resistance around $0.7338, $0.7367 and $0.7494 levels. Initial support level is seen at $0.7068.
Equities Recap
South Korea’s Kospi was trading 1.20 percent higher at 1,987.12 points.
Tokyo's Nikkei was trading 0.51 percent higher at 18,368.22 points.
Shanghai composite index to open down 0.1 pct at 3,202.03 points and China's csi300 index to open down 0.1 pct at 3,466.24 points.
Hong Kong's Hang Seng was trading 0.86 percent higher at 22,698.00 points.
Australia's S&P/ASX 200 was trading 0.78 percent higher at 5,442.52 points.
India’s NSE Nifty was trading around 0.35 percent higher at 8,156.90 points and BSE Sensex was trading at 0.46 percent higher at 26,467.57 points.
Commodities Recap
U.S. crude futures strengthened Monday before retreating in post-settlement trade as the market lost confidence OPEC cuts would be sufficient to reduce oversupply given increased U.S. drilling. U.S. West Texas Intermediate crude rose early in the day and began to pare gains in the late afternoon, settling at $51.79 a barrel, up 11 cents or 0.21 percent, before retreating to as low as $51.11 a barrel. Brent crude settled at $54.94 a barrel, up 48 cents - or 0.88 percent - before retreating to $54.22 a barrel.
Gold edged up on Tuesday as bargain hunters moved in after prices touched their lowest in 10 months in the previous session, although the chance of a rate hike as early as next week kept a lid on gains. Spot gold was up 0.3 percent at $1,173.66 an ounce by 0300 GMT. The yellow metal touched $1,157 an ounce on Monday, its lowest since Feb. 5. U.S. gold futures, which also touched a 10-month low in the prior session, shed 0.1 percent to $1,175.30 per ounce.
Treasuries Recap
New Zealand government bonds dipped, sending yields as much as 4 basis points higher at the long end.
Australian government bond futures were near multi-month lows, with the three-year bond contract off 1 tick at 98.040.
10-year JGB yield rises above 0.045 percent to highest level since February.
Taiwan sells 10-year govt bonds at 1.15 pct yield – Central Bank (poll yield 1.19 pct - 1.225 pct).
