Gold hits another new high on reports India may buy more from IMF
MAJOR HEADLINES – PREVIOUS SESSION
- US Q3 GDP Revision out at 2.8% q/q, as expected vs. 3.5% prior
- US Q3 S&P/Case-Shiller Home Price Index out at -8.86% y/y vs. -10.25% expected and revised -14.74% prior
- US Nov. Consumer Confidence out at 49.5 vs. 47.3 expected and revised 48.7 prior
- US Nov. Richmond Fed Index out at 1 vs. 8 expected and 7 prior
- US Sep. House Price Index out at flat m/m vs. +0.1% expected and revised -0.5% prior
- US Weekly ABC Consumer Confidence out at -47 vs. -45 prior
- JP Oct. Merchandise Trade Bal. out at ¥807.1b vs. ¥465.5b expected and revised ¥525.3b prior
- JP Oct. Trade Exports out at -23.2% y/y vs. -26.8% expected and revised -30.6% prior
- JP Oct. Trade Imports out at -35.6% vs. -34.0% expected and -36.9% prior
- JP Oct. Corporate Service Price out at -2.2% y/y vs. -2.6% expected and -3.2% prior
- AU Nov. DEWR Skilled Vacancies out at +2.4% m/m, unchanged from revised data prior
- AU Q3 Construction Work Done out at +2.2% vs. flat expected and revised 4.5% prior
- JP Nov. Small Business Confidence out at 43.0 vs. 43.4 prior
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
- GE GfK Consumer Confidence (0700)
- Sweden Consumer/Manufacturing Confidence (0815)
- Norway Unemployment (0900)
- UK Q3 GDP Revision (0930)
- US Weekly MBA Mortgage Applications (1200)
- US Personal Income/Spending (1330)
- US Durable Goods Orders (1330)
- US Weekly Jobless Claims (1330)
- US Final Univ. of Michigan Confidence (1500)
- US New Home Sales (1500)
- EU ECB’s Mersch to speak (1500)
Market Comments:
Once again the risk “scare” that was a major feature of the Asian session yesterday proved fleeting and both the European and US sessions reverted back to broad-based dollar selling. A mix of stronger data releases proved to be the catalyst for the rebound in EUR, as German IFO surveys came in better than forecast across all reports, while talk that an agreement had been reached to stabilize West LB also helped sentiment. The BOE testimony was balanced, though it was hugely apparent that Gov. King is unimpressed by the economic rebound. King said policy tightening (end of QE and traditional rate hikes) would take place over the next 2-3 years.
In the US, data was mixed, with a downward revision to Q3 growth widely expected and the two separate house price indices from S&P/Case-Shiller, while higher m/m, failed to inspire. On the other hand, the Conference Board’s consumer confidence showed a strong rebound to 49.5 versus last month’s dismal 47.3 print but the weekly ABC seems mired at the -47 level.
FOMC minutes also held nothing new apart from upgrades to forecasts for growth (to -0.4% to -0.1% from -1.5% to-1.0% for this year, 2.5%-3.5% from 2.1%-3.3% for next). Some concern was expressed that the low interest rate environment could lead to excessive risk taking but the minutes also made it clear that short term interest rates would be determined by changes in the economic outlook. However, perhaps one of the biggest takeaways from the minutes was the fact that the FOMC regarded the dollar’s recent depreciation as orderly and may be interpreted by markets as a “green light” for further dollar weakness.
There was evidence of a minor dip in the dollar during the Asian session as the dollar index reverted back to sub-75 levels. Volumes were not particularly large though and the stand-out mover was again gold with another all-time high for the XAUUSD pair. Some pointed to news in local press that India was “open” to buying more gold from the IMF as a reason for the firmer tone.
Data releases tended to surprise to the upside, with Japan’s trade surplus widening out to ¥807.1 bln, almost double forecasts, and marked the ninth monthly surplus in a row and almost back to Q1 2008 levels. Export performance was solid with exports gaining 2.5% on a monthly basis, the first gains in 4 months despite a rising JPY. Imports fell 2.0% m/m and 35.6% compared with a year ago.
Australian data also looked as if it was confirming the RBA’s more-bullish stance on the economy. Construction work rebounded by a solid 2.2% in Q3 while Q2’s initial 0.1% decline also revised up sharply to a 4.5% rebound. The better performance was reflected across the board in both residential and non-residential building work. With construction accounting for close to 15% of the economy, the stronger data has positive implications for Q3 GDP data and, more immediate, the RBA rate meeting on Tuesday. The data, firmer gold and a weaker dollar all contributed to the upward bias for AUD.
A busy data slate today, with UK GDP data for Q3 grabbing the attention in Europe while the final fling for the US before the Thanksgiving holiday features personal income/spending, durable goods orders, early jobless claims, Michigan confidence and new home sales.
Happy Thanksgiving.
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