JPY weakens again on weak bond market. Pound rebounds as Moody's declares no revision to UK credit rating in the Works.
USD outlook remains in suspended animation awaiting today's US Advance Retail Sales.
MAJOR HEADLINES – PREVIOUS SESSION
- China Nov. Producer Price Index fell -2.1% YoY vs. -2.4% expected and -5.8% in Oct.
- China Nov. Purchasing Price Index fell -3.6% YoY vs. -4.0% expected and -8.4% in Oct.
- China Nov. Consumer Price Index rose +0.6 YoY vs. +0.4% expected and -0.5% in Oct.
- China Nov. Retail Sales rose 15.8% YoY vs. 16.5% expected and 16.2E in Oct.
- China Nov. Industrial Production rose 10.3% YoY vs. 10.2% expected and 9.4% in Oct.
- China Nov. New Yuan Loans totaled 294.8B vs. 250B expected and 253B in Oct.
- China Nov. Trade Balance fell to $19.1B vs. $24.3B expected and $24B in Oct.
- Japan Nov. Consumer Confidence fell to 39.9 vs. 40.7 expected and 40.8 in Oct.
THEMES TO WATCH – UPCOMING SESSION
(all times GMT)
- UK Nov. PPI Input/Output (0930)
- Canada Oct. New Housing Price Index (1330)
- US Nov. Import Price Index (1330)
- US Nov. Advance Retail Sales (1330)
- US Dec. Preliminary University of Michigan Confidence (1500)
- US Oct. Business Inventories (1500)
Market Comments
US treasury futures continued to slide and Asian equity markets ticked higher in the Asian session, helping to underline the recent support in USDJPY, which has come some 150+ pips off its recent lows. Chinese data appears strong save for the shrinking Trade Balance number, which underlines the idea that China is trying to stimulate its way into the future. Many are raising questions about the quality of Chinese growth, but for now, the market seems to be willing to take it more or less at face value. The USD has been treading water against developing Asian currencies for about two months now in a shrinking range. Today's Chinese data failed to provide a catalyst for any action.
Elsewhere, the greenback seems to have gone into some kind of suspended animation here, refusing to give a sign of what it wants to do after mounting a comeback and now more or less continuing to ward off weakness despite relatively strong risk appetite elsewhere. The pound found considerable relief overnight after rumors of a Moody's revision to the UK's AAA reading on its sovereign debt. Moody's was out denying the rumors point blank. This sent GBPUSD back over 1.6300 before Londoners even arrived for work and EURGBP back toward the interesting 0.9020/00 zone of support, a break of which would look significant. The pound has survived Brown and company's attack on bank bonuses relatively well, something that adds another arrow the rare pound bull's quiver.
Chart: EURGBP
EURGBP getting interesting as we head into the European session, considering the obvious focus on the 0.9020/00 support area (flatline and the skimming along the 21-day moving average). If this area gives way soon, the pair could go on for a full test of the 200-day moving average below 0.8900 again.
EURGBP getting interesting as we head into the European session, considering the obvious focus on the 0.9020/00 support area (flatline and the skimming along the 21-day moving average). If this area gives way soon, the pair could go on for a full test of the 200-day moving average below 0.8900 again.
Looking ahead
All eyes are on the US retail sales data today. A mild improvement is expected despite chain store sales reporting a small drop for the month in same store sales. The US 10-year note benchmark deserves plenty of attention today as it is now trading up against a near 1-month high at the psychologically significant 3.50% level. JPY crosses have been the big movers of late and the kind of volatility we have seen is likely to persist .As for the USD, it feels like today is the today that we either see confirmation or rejection of the recent rally after two days of going absolutely nowhere.
All eyes are on the US retail sales data today. A mild improvement is expected despite chain store sales reporting a small drop for the month in same store sales. The US 10-year note benchmark deserves plenty of attention today as it is now trading up against a near 1-month high at the psychologically significant 3.50% level. JPY crosses have been the big movers of late and the kind of volatility we have seen is likely to persist .As for the USD, it feels like today is the today that we either see confirmation or rejection of the recent rally after two days of going absolutely nowhere.
No comments:
Post a Comment