Market Roundup
- BoJ leaves policy/economic assessment as is, as expected, vote 8-1, Kiuchi dissents.
- Japan Oct trade surplus Y111.5 bln, exports -2.1% y/y, imports -13.4%, Y292 bln deficit, -2.1% and -8.6% expected, exports to US +6.3%, China -3.6%, Asia -3.6%, 1st trade surplus in 7-mos, exports off for 1st time in over a year.
- Japan Oct crude oil imports -3.7% y/y, LNG -12.8%, thermal coal +0.7%.
- MoF flow data week-ended Nov 14 - Japanese buy net Y12.4 bln foreign stocks, Y871 bln bonds, sell Y54 bln bills; foreign investors buy net Y327.9 bln Japanese stocks, Y245.4 bln bonds, Y187.4 bln bills, volume large.
- Finland Pohjola Bank launches 0.325% Y30 bln 2-tranche 5-yr samurais.
- Riksbank Gov Ingves - Rising risks from housing market - Svenska Dagbladet.
- NZ Q3 PPI inputs +1.6% q/q, outputs +1.3%, Q2 -0.3%, -0.2%.
- NZ Oct job ads +1.2% m/m, +0.1% y/y, newspapers -10.1% m/m, internet +2.3%.
Economic Data Ahead (GMT)
- 07:00 Swiss Oct trade balance, CHF3.4 bln surplus expected; last bln surplus.
- 08:30 Sweden Oct unemployment, 6.7% nsa, 7.3% sa expected; last 6.7%, 7.3%.
- 09:00 EZ Sep current account balance; last E13.7 bln surplus nsa, E17.7 bln sa.
- 09:00 EZ Sep net investment flow; last E32.6 bln inflow.
- 09:30 UK Oct retail sales, -0.5% m/m, +4.2% y/y expected; last +1.9%, +6.5%.
- 13:30 US Nov Philly Fed business sentiment index, -1.0 expected; last -4.5.
- 13:30 US w/e initial jobless claims, 271k expected; last 276k.
- 15:00 US Oct leading indicators index, +0.5% m/m expected; last -0.2%.
Key Events, Auctions Ahead (GMT)
- N/A Frankfurt EuroFinance Week -ECB Weidmann, Praet, Coeure, Buba Buch speak.
- 09:30 Spain E3-4 bln 0.25/1.15/5.4% 2018/20/23 Bono auctions.
- 09:50 France E7-8 bln 4.25/0.25/2.25% 2018/20/22 OAT auctions.
- 10:50 France E1-1.5 bln 0.25/1.85/3.15%c 2024/27/32 index-linked OAT auctions.
- 12:05 Riksbank Gov Ingves speech in Stockholm/12:30 ECB October minutes.
- 16:00 NY Fed Q3 household debt and credit report.
- 17:00 Buba Nagel Munich speech/17:30 Atlanta Fed Lockhart Atlanta speech.
- 21:45 FOMC ViceChair Fischer speech at San Francisco Asia EM conference.
FX Beat
USD: Against a basket of currencies the dollar dropped 0.4 percent at 99.217 and away from a seven-month peak. It eased against the yen to 123.25, after touching a 3-month peak of 123.67.
EUR/USD: The euro added about 0.4 percent to $1.0703, pulling away from Wednesday's seven-month low of $1.0617. It opened in Asia at 1.0659, which was a good lift post-Fed minutes, it was trading at 1.0617 but then rose to 1.0670+, 1.0700+ stops tripped on way up, offers seen at 1.0720, 1.0690 retracement low. At 10-DMA trend line since it broke lower on Oct 23, 1.0746 key level.
USD/JPY: The pair was on back foot as USD was heavy post-Fed minutes, BoJ also kept the policy unchanged. It touched a high of 123.77 and bids at 123.20 were filled. More bids pre-USD637 mln 123.00, option expiries at 1.366 bln 124.00-05. EUR/JPY touched 131.28 late NY, and was trading at 131.68 in early Asia, it touched 132.26 before easing back. GBP/JPY was also trading in a range of 188.09-80, AUD/JPY in 87.77-88.46 and NZD/JPY in 79.88-80.76.
GBP/USD: Cable bid on broad USD weakness, it rose to 1.5295 from 1.5228 in Asian session, it was back above flat 1.5269 Ichi kijun, 200-DMA above at 1./GBP slightly better bid in Asia, 0.6995-0.7007, 1.5266 20 DMA break a positive for the pair - close above turns sentiment bullish.
USD/CHF: The pair was on back foot on heavy USD, in Asia it fell from 1.200 to 1.0149 although uptrend was intact. Support was seen at ascending 1.0152 Ichi tenkan, 1.0107-45 hourly cloud. EUR/CHF bid in Asia between 1.0866-86, was back in narrower 1.0859-90 Ichi cloud.
AUD/USD: The Australian dollar rose to $0.7144 from $0.7097 as investors favoured risk assets such as equities. Resistance was found around $0.7160, with support at $0.7070. The pair opened in Asia at 0.7110, traded up from 0.7103 to 0.7077. It was in sideways before large short-covering flows. While the New Zealand dollar gained 0.7 percent on the day to $0.6515, having bounced from a seven-week trough of $0.6430 on Wednesday.
USD/CNY: China's yuan rose against the dollar after the PBoC set a stronger midpoint for only the second time this month. The central bank set the midpoint rate at 6.3791 per dollar prior to market open, 0.01 percent firmer than the previous fix 6.3796. The spot market opened at 6.3820 per dollar and jumped to 3.745 soon after in response to the stronger fix. It was changing hands at 6.3781 at midday, 0.11 percent firmer than the previous close. The offshore yuan was trading 0.49 percent weaker than the onshore spot at 6.4094 per dollar.
Equities Recap
Asian shares rose on Thursday and the dollar eased from highs on expectations the US Fed would be confident enough to hike rates in December but would then proceed with great caution on further tightening.
Japan's Nikkei ended up 1.07 percent, brushing aside a disappointing report on exports and imports. MSCI's broadest index of Asia-Pacific shares outside Japan added 1.5 percent. Australia's main index closed 2 percent, aiming for a third straight session of gains. Chinese markets were calmer with the CSI300 index up a slim 0.2 percent. Seoul shares finished the day up 1.22 pct, while Taiwan stocks rose 1.6 pct.
Treasuries Recap
U.S. 2-year yields rose 3 basis points, 30-year paper dropped a basis point. The premium offered by U.S. two-year debt over its German counterpart also yawned out to 124 basis points, the fattest margin since 2006 and a positive for the dollar.
New Zealand government bonds dropped, sending yields 1.5 basis points higher across the curve. Australian government bond futures were a touch softer, with the 3-year bond contract down 2 ticks at 97.870. The 10-year contract eased 1 tick to 97.0650, while the 20-year contract shed 2 ticks to 96.5200.
Canadian government bond prices were mixed across the maturity curve, with the 2-year price down 3.5 Canadian cents to yield 0.641 percent and the benchmark 10-year rising 6 Canadian cents to yield 1.651 percent. The Canada-U.S. two-year bond spread was 1 basis point wider at -23.9 basis points, while the 10-year spread was 2 basis points wider at -62.3 basis points, as Canadian government bonds outperformed.
Commodities Recap
Crude oil prices inched higher in Asia but still struggled to break away from the $40-per-barrel mark as oversupply and high inventories ensured an ongoing glut. U.S. West Texas Intermediate crude futures were trading at $40.91 per barrel at 0525 GMT, up 16 cents from their last settlement. Brent crude futures were at $44.50 a barrel, up 36 cents.
Gold prices recovered from their lowest in more than five years the previous session as the dollar slipped back, releasing its stranglehold on commodities and making gold more affordable for buyers paying with other currencies. Spot gold rose 0.6 percent at $1,077.20 an ounce by 0216 GMT. U.S. gold climbed 0.8 percent to $1,077 an ounce.
