Market Roundup
- Japan Nov Economy Watchers Poll Decreases to 46.1 vs previous 48.
- Japan EconMin Amari - Despite upward GDP revision, achieving government's growth target for fiscal may be ambitious - Reuters.
- Japan revised Q3 GDP +0.3% q/q, unch forecast, prelim -0.2%, annualized +1.0%, +0.1% forecast, prelim -0.8%, Japan not in recession, CAPEX higher than forecast, +0.6% q/q vs +0.7% forecast and prelim -1.3%, domestic demand revised up too.
- Japan Oct current account surplus trln, trln forecast, surplus for 16 straight months now, trade balance back in surplus, helped.
- MoF Nov flow data - Japanese bought net Y506.3 bln foreign stocks, trln bonds, sold Y85.9 bln bills; foreign investors bought net Y542.7 bln Japanese stocks, trln bonds, sold Y882.8 bln bills.
- Japan Nov outstanding bank loans Y492.6 trln, +2.3% y/y, Oct +2.5%.
- Reuters poll - Japan firms see JPY weakening to at least 125 next year, most see no business expansion in China next year.
- Japan Nov bankruptcies -2.7% y/y (Teikoku Databank), -3.3% (Tokyo Shoko).
- China Nov trade surplus $54.1 bln, $63.3 bln forecast, exports -6.8% y/y, imports -8.7%, -5%/-12.6% forecast; CNY343.1 bln surp, exports -3.7% y/y, imports -5.6%.
- Cleveland Fed - PCE to hit 2% gola mid to late-'17 - MNI.
- UK Nov BRC like-for-like retail sales -0.4% y/y, weakest Nov reading since '11, +0.4% forecast, Oct -0.2%; total retail sales +0.7% y/y, also weakest since '11, Oct +0.9%.
- Korn Ferry - Low inflation to give biggest global pay boost in 3 years.
- Australia Nov NAB business conditions index steady at +10, confidence up to +5, Oct +3.
- NZ Q3 mfg sales volumes +3.5% q/q, Q2 rev unch, prelim -0.2%.
- Fitch - Asia growth to normalize, not collapse as pressures mount.
Economic Data Ahead
- (0230 ET/0730 GMT) France Nov BdF business sentiment index, 99 forecast; last 99.
- (0245 ET/0745 GMT) France Oct trade balance; last bln deficit.
- (0245 ET/0745 GMT) France Oct budget balance; last E74.5 bln deficit.
- (0300 ET/0800 GMT) Great Britain Nov Halifax housep price index, +0.2% m/m forecast; last +1.1%.
- (0430 ET/0930 GMT) Great Britain Oct ind production, +0.1% m/m, +1.2% y/y forecast; last -0.2%, +1.1%.
- (0430 ET/0930 GMT) Great Britain Oct mfg production, unch m/m, +0.1% y/y forecast; last +0.8%, -0.6%.
- (0500 ET/1000 GMT) Eurozone Q3 GDP - revised, +0.3% q/q, +1.6% y/y forecast; prelim +0.3%, +1.6%.
- (0600 ET/1100 GMT) United States Nov NFIB business optimism index; last 96.1.
- (1000 ET/1500 GMT) United States Oct JOLTS job openings, 5.5 mln forecast; last 5.53 mln.
Key Events Ahead
- N/A EcoFin meeting in Brussels.
- N/A UN COP 21 conference in Paris (till December 11).
- (0406 ET/0906 GMT) BoJ Gov Kuroda speech to open Tokyo Economist conference.
- (0430 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E68 bln allotment forecast, last bln.
- (0530 ET/1030 GMT) United Kingdom DMO GBP2 bln 3.5% 2045 Gilt auction.
- (0700 ET/1200 GMT) ECB/Slovakia CB Makuch press conference on macroeconomic qtrly, fcsts.
- (1310 ET/1810 GMT) BoC Gov Poloz speech, press conference in Toronto.
FX Beat
USD: U.S. dollar was broadly firmer early on Tuesday as commodity currencies slid sharply on the back of a tumble in oil prices. OPEC's inability to agree on a production ceiling last Friday meant that supply will continue to depress oil prices. The greenback jumped to C$1.3524 a high not seen since mid-2004 and it last stood at C$1.3506. It slipped 0.2 percent against the yen to 123.09 yen. Against the crown, it rallied more than 1.5 percent to 8.6786.
EUR/USD: The euro edged up 0.2 percent to $1.0853, staying well above last week's trough of $1.0523. Rising safe-haven appeal on commodity rout supporting the single currency. The pair extends recovery towards hourly 50-SMA jumping-off hourly 20-SMA support near 1.0830 region. The pair is currently trading at 1.0850, with immediate resistance at 1.0887 (Dec 7 highs) and support at 1.0820 (trendline support). Eurozone revised GDP and the US JOLTS job openings data due later in the day will be watched for further cues on direction.
USD/JPY: China trade data-led risk-off supports Japanese Yen which snaps losses and extends gains against its American rival. China trade balance came in at ($54.1B, below expectations at $63.3B in November. Exports declined more than previous, coming at -3.7% against a -2.9% drop expected. Dismal data refuelled concerns over the health of China's economy. USD/JPY breached key support near 123.10 region and fell as low as 123.06. The pair found support at hourly cloud top and has pared some losses to currently trade at 123.14. Next immediate resistance is seen at 123.43 (Nov 10 high).
AUD/USD: The Australian dollar dropped to $0.7267 after reaching a 4-month peak of $0.7386 on Friday. Poor China trade data keeps the Aussie pressurised. The Pair fell to session lows at 0.7238 and shows room for further depreciation. Also, the recent sell-off in commodities with oil prices at multi-year lows and a broadly stronger US dollar, keeps the resource-linked Australian dollar on the back foot. It edged below trend line resistance and closed below in Monday's trade and we see tests of 0.72 levels in the near term. Immediate resistance is seen by daily Tenkan at 0.7277 and support on the downside is located at 0.7220 (Dec 1st lows).
NZD/USD: The New Zealand dollar was among the worst performers as it slid back to 0.6644 from a 1-month peak of 0.6787 set on Friday. Price action is back inside the daily cloud and daily Tenkan at 0.6650 capping upside in the pair. Rangebound trade seen in the Asian session, a meagre 18-pip range 0.6650/32 seen. Charts show further declines in the pair, 0.65 levels likely soon. Markets also await RBNZ policy review meeting due tommorow, 9 December 2015, expectations are for a 25 bps cut.
EUR/JPY: Bearish pressure on EUR/JPY intact, upside in the pair capped by daily pivot at 133.64. Yen strength seen on the back of upbeat Japanese GDP data, which showed that the troubled economy avoided a technical recession in the Sept quarter. Also China trade data-led risk-off added support. EUR/JPY currently trading at 133.53, with 200 DMA at 134.08 offering strong resistance on the upside ahead of cloud top by 134.13 which has been capping gains in the pair since ECB meet. Support on the flipside is seen at 133.32 (Dec 4th lows) and then at 133.29 (Dec 7 lows)
USD/CNY: The offshore Chinese yuan traded at a 3-month low of 6.48 per dollar despite another lower-than-expected fixing by PBoC. The spot market opened at 6.4130 per dollar and was trading at 6.4180 at midday weaker than its previous close.
Equities Recap
Asian stocks hit 3-week lows on Tuesday as energy company shares dropped with a decrease in oil prices and many investors moved to the sidelines ahead of Federal Reserve's expected interest rates hike.
The MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent, erasing the gains made earlier this month, with Hong Kong shares declining with a fall of 1.8 percent.
Australia's S&P/ASX200 Index edged down 0.82 pct at 5,113.20 points while Nikkie dropped 1.04 pct at 19,492.60 with seoul down at 0.62 pct.
Commodities Recap
Gold slipped down on overnight losses on expectations of a Federal Reserve rate hike next week and a robust dollar. Spot gold had edged up 0.2 percent to $1,071.85 an ounce by 0348 GMT, but not far from Monday's session low of $1,069.66.
Crude prices hovered a 7-year lows on Tuesday as OPEC continues to pump near record oil to defend market share. Benchmark Brent and WTI futures both dropped over 6 percent the previous session to reach 2015 lows, and they are closing in on levels last seen during the credit crunch of 2008/2009. U.S. crude dropped to as low as $3750, hitting a near 7 year low and was trading at $37.77 a barrel at 0300 GMT, up 12 cents from its last settlement.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.2112 percent down by 0.014.
Australian government bond futures climbed from multi-month lows in a bullish flattening of the curve as the 3-year bond contract gained 4 ticks at 97.850, while the 10-year contract increased 8 ticks to 97.1000 with the 20-year contract added 8 ticks to 96.5850.
New Zealand government bonds gained, sending yields 3 basis points lower along the curve.
The Canadian government bonds outperformed as the 2-year price rose 5.5 Canadian cents to yield 0.601 percent and the benchmark 10-year gained 56 Canadian cents to yield 1.518 percent. The Canada-U.S. 2-year bond spread was 1.6 basis points wider at -33.4 basis points, while the 10-year spread was 1.2 basis points wider at -70.7 basis points.
