News of the multiple terrorist attacks in Paris and claimed by Islamic State came about 4.30pm New York time so after futures markets and US stock exchanges had closed for the week but before spot FX and cash bonds had finished. FX rates were largely unchanged in the last half hour of trade, but Treasuries rallied across the curve, by between 0.5 and 1.0bps with a “risk off” flavour. The atrocities will inevitable weigh heavily on market risk sentiment at the start of this week and, we’d suggest, is the type of event that could have the Fed re-thinking whether to tighten policy next month if global equity markets see a significant correction in coming days. We simply observe that there was no global equity market rout in the aftermath of the London underground terrorist bombings in July 2005. Neither did it interrupt the ‘quarter point per meeting’ Fed tightening cycle that commence in mid-2004 and ended in 2006.

In FX, the EUR and AUD open on the softer side this morning, the AUD at 0.7110/20 and EUR below 1.0750. On safe haven flows, for FX you’d expect JPY to outperform; that’s how it’s initially trading this am. The AUD/USD, USD/JPY, NZD/USD and GBP/USD were all completely unchanged Friday on Thursday’s NY closing level. Rises in US dollar indices (DXY +0.16% to 98.80, BBDXY +0.3% and ADXY -0.3%) were driven by a 0.4% drop in EUR/USD to 1.0773 and pressure on EM currencies, including a slightly higher USD/CNY in onshore trade Friday. Offshore, CNH fell 0.24%, USD/CNH +0.0151 to 6.4068, the first close above 6.40 since 23 September.

Data Friday showed Eurozone Q3 GDP up 0.3%, below the 0.4% expected and 0.4% in Q2. Germany and France both printed 0.3% as expected; Italy fell short at 0.2% against 0.3% expected. US retail sales printed at 0.1% against 0.3% expected and ex-autos +0.2% against 0.4% expected, with headline and core PPI both weaker than expected. As a counter, the UoM preliminary November Consumer Sentiment survey rose to 93.1, above consensus and last month (91.5E, 90.0 October final).

The FT reported Saturday the IMF staff recommended the RMB be included in the SDR, on the agenda at the Nov 30 Board meeting. IMF MD Christine Lagarde is quoted saying ‘I support the staff’s findings’. This doesn’t guarantee an affirmative vote but it seems it’s highly likely. No detail given on the likely initial weight of the CNY in the SDR basket or of any conditionality to the decision ahead of implementation that, as previously announced, would not be before Sep 2016. This could though play with the grain of the weaker trend that emerged last week and which (in CNH) accelerated in offshore hours on Friday.

Finally, local weekend CoreLogic RP Data weekend auctions reported the 3rd busiest week this year for supply, with Sydney’s auction clearance rate at 61.0% from under 60% last week and Melbourne’s also little changed remaining under 70% at 69.5%.

Coming up

For data and events this week, locally we have Wages Wednesday as the key data point. More RBA interest with the RBA’s Chris Kent speaking tomorrow along with the November RBA Board Minutes. More speeches with theRBA’s Debelle speaking Wednesday and Heath Friday.

Japan has its Q3 GDP this morning and the BOJ meets Thursday. In the US, CPI, industrial production, NAHB housing index all Tuesday, housing starts then FOMC minutes Wednesday, Philly fed index Thursday, several Fed speakers too. For the Eurozone, there is the CPI tonight, and there is a bevy of ECB speakers, many at the Euro Finance Week event, including Draghi with two speeches, one tonight. Very light for China data this week with only property prices likely to draw any interest.

Overnight

AUD opens a tad lower this am: Eurostoxx 600 -0.8%, Dax -0.7%, CAC -1.0%, FTSE -1.0%. Dow -203 points to 17,245, -1.2%, S&P 500 -1.2%, Nasdaq -1.5%, VIX 20.08 +9.3%. Shanghai -1.4%, Mumbai -1.4%, Nikkei 225 -1.5% and ASX 200 -1.5%; ASX SPI futures this morning -0.7%. US bond yields: 2s at 0.83% (-4), 10s at 2.27% (-5). WTI oil at $40.74 (-2.4%), Brent at $44.47 (-1.6%), Malaysian Tapis (yesterday) $43.71 (-3.2%). Gold at $1080.90/oz (-0.0%). Base metals: LME copper +0.0%, nickel +0.2%, aluminium -0.1%. Iron ore $48.1/t +0.7% Chinese steel rebar futures -0.2%. Soft commodities spot futures: wheat -0.3%, sugar +0.5%, cotton -0.3%, coffee -2.5%. Euro CO2 emissions price (Dec 15) +0.2%. The AUD/USD’s range Friday night 0.7106-0.7159; indicative range today 0.7080-0.7135; the AUD/USD is 0.7111 now

French GDP (Q3) 0.3% (L: 0.0%/1.1%; E: 0.3%/1.3%); German GDP (Q3) 0.3% (L: 0.4%/1.6%; E: 0.3%/1.8%); Italy GDP (Q3) 0.2% (L: 0.3%/0.7%; 0.3%/1.0%); EC GDP (Q3) 0.3% (L: 0.4%/1.5%; E: 0.4%/1.7%); US Retail Sales (Oct) 0.1% (L: 0.1%; E: 0.3%); PPI (Oct) -0.4% (L: -0.5%/-1.1%; E: 0.2%/-1.2%); UoM Consumer Sentiment (Nov) 93.1 (L: 90.0; E: 91.5)

Good luck and stay safe.

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• Markets Today: 166 November 2015 (PDF, 335KB)

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