Well not quite, in terms of manic that is. China received the official nod from the IMF for inclusion in the SDR as entirely expected, the AUD sits back above 0.72 this morning, notwithstanding another move lower in Chinese iron ore spot prices overnight. And Cyber Monday US internet retail sales at the end of the Thanksgiving Day holiday weekend, has seemingly topped off better web-sales growth than last year (26% Sat/Sunday; 18% Monday cf 17%/Monday 8.5% last year). Finally, on the data front, German November CPI was right in line with expectations and the US had mixed – and again volatile – regional manufacturing reports ahead of the national ISM tonight. India reported its Q3 growth at 7.4%, a point more than the 7.3% expected and up from 7.0% in Q2.

The IMF Board agreed to include the RMB in the its Special Drawing Rights (SDR) currency basket from 1 October 2016, recognising that the RMB is “freely usable” for international payments and China’s importance in global exports. The weight for the RMB was set at 10.9%, compared with 42.97 for the USD and 30.93% for the EUR. The JPY will be 8.33% and GBP 8.09%. No immediate practical implications; for 2016, there may well be an expectation of RMB weakness next year with EM weakness and AUD also then vulnerable.

For overnight FX moves, the broad rally in high-yielding currencies seems to have been sparked by a sharp gain in the CNH after the CNH-CNY spread blew past 600pts on Friday and early yesterday morning, the AUD making headway through the session overnight, despite another decline in iron ore, a recent trend we expect the RBA to acknowledge this afternoon.

Coming up

There’s a suite of less market sensitive data first thing this morning with weekly ANZ–RM consumer confidence, the AiG PMI Nov Manufacturing report, then at 10AM the November month CoreLogic RP data House Prices that on our figuring should reveal close to a 1.5% fall, thanks to receding prices in Sydney (-1½%) and Melbourne (-3½%). Then, more meaty reports with the Q3 net exports and government spending at 11.30, net exports likely to confirm a return to growth support; we look for +1.3% points; the market 1.2% points after Q2’s -0.6%. Oct building approvals will show whether last month’s 2.2% rise was more noise than trend; we suspect so, expecting a flat result, the market is looking for a decline of the 2.5%. Then ahead of the RBA board outcome at 2.30, the key China official and private-sector manufacturing and non-manufacturing PMIS are released respectively at 1245, the market expecting unchanged outcomes both manufacturing measures, the official PMI at 49.8 and the Caixin index at 48.3. It’s the Caixin index that may well draw as much if not more market interest; it’s been higher than expected for the past two months, suggestive of a recovery.

As for the RBA Board outcome at 230, the market is priced for only one in 25 chance of a cut with no economist in last Friday’s is Bloomberg survey tipping a change this afternoon. If at all that was any doubt, Governor Stevens’ comments last week for the markets to “chill out” about a December rate cut has more than sealed the deal. In today’s statement, we look for the bank to recognise signs of moderating Sydney and Melbourne house prices, the A$ has been relatively steady despite further commodity price softness, especially iron ore but that the domestic economy continues to show signs of emerging growth. We look for the Bank to retain its weak easing bias, NAB expecting the cash rate to remain on hold though next year.

The big release in the US tonight is the ISM manufacturing index for November, printing at a just – growing 50.1 in October market expecting a small acceleration to 50.5 with particular focus on the employment component ahead of payrolls on Friday. Chicago Fed President Charles Evans also speaking.

Overnight

AUD back above 0.72: Eurostoxx 600 +0.5%, Dax +0.8%, CAC +0.6%, FTSE -0.3%. Dow -34 points to 17,764, -0.2%, S&P 500 -0.2%, Nasdaq -0.2%, VIX 16.29 +7.7%. Shanghai +0.3%, Mumbai +0.3%, Nikkei 225 -0.2% and ASX 200 -0.7%; ASX SPI futures this morning +0.2%. US bond yields: 2s at 0.93% (1), 10s at 2.22% (-0). WTI oil at $41.61 (-0.2%), Brent at $44.54 (-0.7%), Malaysian Tapis (yesterday) $43.37 (-0.7%). Gold at $1065.40/oz (+0.9%). Base metals: LME copper +0.3%, nickel +1.4%, aluminium -0.8%. Iron ore $43.0/t -3.4% Chinese steel rebar futures -0.8%. Soft commodities spot futures: wheat -0.2%, sugar -0.3%, cotton -2.0%, coffee -3.2%. Euro CO2 emissions price (Dec 15) +0.0%. The AUD/USD’s range overnight 0.7189-0.7250; indicative range today 0.7205-0.7265; the AUD/USD is 0.7238 now
India GDP (Q3) 7.4% y/y (L: 7.0%; F: 7.3%); German CPI (Nov) 0.1%/0.4% (L: 0.0%/0.3%; F: 0.1%/0.4%); Chicago PMI (Nov) 48.7 (L: 56.3; E: 54); Dallas Fed Mfg Index (Nov) -4.9 (L: -12.7; E: -10); Pending Home Sales (Oct) 0.2% (L: -2.3%; E: +1%)

Good luck.

For full analysis, download report:

• Markets Today: 1 December 2015 (PDF,352KB)

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