US Weekly Claims disappoint, but Trade Balance improves unexpectedly.
Did the SNB hint that it is relaxing some of its interventionist vigilance?
MAJOR HEADLINES – PREVIOUS SESSION
- Sweden Nov. CPI out at 0.0% MoM vs. -0.1% expected
- Switzerland SNB kept 3-month Libor Target Rate at 0.25% as expected
- Norway Nov. CPI out at +0.3% MoM and +1.5% YoY, vs. +0.2%/1.4% expected, respectively
- Norway Nov. Producer Prices including oil out at +4.8% YoY vs. -4.1% in Oct.
- Sweden Nov. AMV Unemployment Rate fell to 5.3% vs. 5.4% expected and 5.4% in Oct.
- UK Bank of England kept rate at 0.50% as expected
- UK Bank of England kept Asset Purchase target at £200 billion as expected
- Canada Oct. International Merchandise Trade out at +0.4B vs. -0.7B expected and -0.9B in Sep.
- US Oct. Trade Balance fell to -$32.9 billion vs. -$36.8 billion expected and -$35.7 billion in Sep.
- US Weekly Initial Jobless Claims rose to 474k vs. 455k expected and 457k last week
- US Weekly Continuing Claims out at 5157k vs. 5450k expected and 5460k last week
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
- US Fed's Duke to Speak (1845)
- US Nov. Monthly Budget Statement (1900)
- China Nov. Producer/Purchasing Price Index (0200)
- China Nov. Consumer Price Index (0200)
- China Nov. Retail Sales (0200)
- China Nov. Industrial Production (0200)
- China Nov. Fixed Assets Investments (0200)
- Japan Nov. Consumer Confidence (0500)
Market Comments
A further gentle rally in risk appetite is seeing the USD test its first important lines of support in today (EURUSD 1.4760/80 and AUDUSD in 0.9180 to 0.9200, to take two benchmarks). Meanwhile, JPY crosses were generally higher as bond yields have more or less eased off the recent move higher. There is zero momentum in equity downside as we enter the NY session, so the USD rally may be in for a hiccup if the bears don't come out of the closet today.
SNB: hint, hint
The SNB rate decision came and went today with little fanfare, as rates are not expected to budge there any time soon. All eyes were on any hints at a change of stance on currency intervention. The SNB did provide a bit of a hint, though the market has hardly reacted to today's meeting and statement. That change is from September's "[SNB declaring it was set on] preventing any appreciation" to the current "[SNB} will act to counter an excessive appreciation". This would seem to allow the franc to float a bit more freely vs. the Euro if anyone out there wants to test what the SNB means by "excessive".
The SNB rate decision came and went today with little fanfare, as rates are not expected to budge there any time soon. All eyes were on any hints at a change of stance on currency intervention. The SNB did provide a bit of a hint, though the market has hardly reacted to today's meeting and statement. That change is from September's "[SNB declaring it was set on] preventing any appreciation" to the current "[SNB} will act to counter an excessive appreciation". This would seem to allow the franc to float a bit more freely vs. the Euro if anyone out there wants to test what the SNB means by "excessive".
US Trade Data: a conundrum
The US Trade Data was better than expected, supposedly boosted by strong exports. But the ex-petroleum trade data saw no change - so was the difference an increase in exported petroleum products?? This is not exactly a strong source of future exports for the US considering its enormous oil import bill. Considering the further rise in average oil prices through November, next month's data is unlikely to show a positive trend for the headline trade balance number unless overall oil imports decreased sharply. The overall trend in the ex-petroleum number is the most important for the time being as long as the oil market doesn't spike higher (has in fact done the opposite over the last couple of weeks).
The US Trade Data was better than expected, supposedly boosted by strong exports. But the ex-petroleum trade data saw no change - so was the difference an increase in exported petroleum products?? This is not exactly a strong source of future exports for the US considering its enormous oil import bill. Considering the further rise in average oil prices through November, next month's data is unlikely to show a positive trend for the headline trade balance number unless overall oil imports decreased sharply. The overall trend in the ex-petroleum number is the most important for the time being as long as the oil market doesn't spike higher (has in fact done the opposite over the last couple of weeks).
Chart: US Initial Jobless Claims
Note that this is the time of the year when non-seasonally adjusted job claims ramp into a new year. While it is encouraging that this year's ramp is far below last years, it is rather disconcerting that claims are still rolling in at a pace far faster than two years ago when the recession was getting under way, and (even on a seasonally-adjusted basis) faster than at the point when the Lehman implosion rocked markets last year. There is a long way to go on the US jobs front, and Obama is clearly worried and cooking up jobs plans to increase employment into the November mid-term elections.
Note that this is the time of the year when non-seasonally adjusted job claims ramp into a new year. While it is encouraging that this year's ramp is far below last years, it is rather disconcerting that claims are still rolling in at a pace far faster than two years ago when the recession was getting under way, and (even on a seasonally-adjusted basis) faster than at the point when the Lehman implosion rocked markets last year. There is a long way to go on the US jobs front, and Obama is clearly worried and cooking up jobs plans to increase employment into the November mid-term elections.
Looking ahead
Plenty of interest on the radar for Friday, with the raft of Chinese data tonight (China implosion watch may be a bit premature, but it will be interesting to see if some of the Retail data fades now that the authorities have pulled out the rug from the credit gasoline fire that was instigated earlier this year). Tomorrow features UK PPI data, US Advance Retail Sales for November, and the preliminary December Michigan Confidence reading.
Plenty of interest on the radar for Friday, with the raft of Chinese data tonight (China implosion watch may be a bit premature, but it will be interesting to see if some of the Retail data fades now that the authorities have pulled out the rug from the credit gasoline fire that was instigated earlier this year). Tomorrow features UK PPI data, US Advance Retail Sales for November, and the preliminary December Michigan Confidence reading.
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