Global Markets:
- Asian stock markets: Nikkei fell 0.16% Shanghai Composite rose 0.82%, Hang Seng fell 0.98%, ASX200 rose 0.49%
- Commodities: Gold at $1075.10 (0.25%), Silver at $14.27 (-0.31%), WTI Oil at $36.44 (0.83%), Brent Oil at $36.46 (0.97 %)
- Rates: US 10 year yield at 2.23% UK 10 year yield at 1.87%, German 10 year yield at 0.60%
News & Data:
- Singapore CPI NSA (MoM) Nov: 0.2% (exp 0.1% prev -0.4%)
- Yuan Overnight HIBOR Surges To Record In Hong Kong
- US Consumer Spending (MoM) Nov: 0.3% (prev rev 0.0%)
- ***REMINDER*** Japanese Markets Are Closed Today For The National Holiday
- China May Speed Up IPO Issuance Next Year — Sec. Journal
- BoK Gov Lee: 2% Inflation Target Not Short-Term Goal – BBG
- Lee: BoK Doesn't Have To Increase Rates Immediately After Fed
- New Zealand Trade Balance (Nov): NZD -779 Mln (exp NZD -810 Mln prev NZD -963 Mln)
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US Existing Home Sales Nov: 4.76M (est 5.35M; rev prev 5.32M) -Existing Home Sales (MoM) Nov: -10.50% (est -0.20%; rev prev -4.10%)
Major currencies update: Post the long-awaited Fed interest rate hike last week, FX markets have continued to trade albeit relatively active, despite many market participants’ expectations for thin trading into holidays and year-end. Some notable moves have been the AUD, and NZD, which have been experiencing some real-money inflows, with the NZDUSD bouncing from last week’s low of 0.6680 from USD gains around the Fed hike to a current price of 0.6818, and the AUDUSD rallying from 0.7100, after a failed attempt of a range-breakout below 0.7160, with the market now back at 0.7240. The AUD’s relative strength has been notable, as it has decoupled from its strongly held correlation with its major export commodity’s price – copper. The two antipodean commodity currencies, in addition, have benefited from the recent bounce in Crude oil off 11-year lows, with Brent for February delivery settling at $36.11 per barrel, after earlier fall to $35.98. With moves in crude oil at times signalling overall market sentiment in being the harbinger for inflationary/deflationary pressures recently, the recent bounce in crude has also brought gains in Asian equities.
The Pound post-the Fed, has fallen significantly relative to peers, marking an intraday low at 1.4800 on Tuesday’s trading. Consensus market expectations put the BoE at a significant gap from the Fed’s hike as average weekly earnings pressure in the UK labor market has tapered off, and inflation and growth forecasts have been downplayed by the UK central bank. In addition to this, the Brexit risk premium can be argued to have had a significant effect in driving down the GBP. Incoming resistance for cable stands at 1.4900. On the case of the EURUSD, the pair has held comparatively well to the GBP vis-à-vis the USD, holding 1.0800 support last week, rallying to a high sub 1.1000 on Tuesday’s trading, with spot now at 1.0900. The euro remains rangebound between 1.1060, and 1.0800. The relative strength of the EUR has sent the EURGBP pair rallying to highs of 0.7415 as well, currently causing a temporary disconnect with the pair’s strong correlation with the Dollar.
Upcoming Events:
- 9:30 BST – UK Final GDP q/q
- 9:30 BST – UK Current Account
- 13:30 BST – Canada Core Retail Sales m/m
- 13:30 BST – US Core Durable Goods Orders m/m
- 13:30 BST – Core PCE Price Index m/m
