Lots of interest overnight whether ECB President Mario Draghi would throw more fuel onto the ECB stimulus expectation fire, schedule to speak at a BoE sponsored open forum on Financial Market Reform event in London. The event was focused on the regulatory and financial market mistakes of the past and efforts to clean up the sector and its regulation, with speakers including Bank of England Governor Mark Carney, the Chancellor of the Exchequer, bankers and academia. Draghi stuck to his reform script, speaking about the need for credible institutions as a counter balance for the freedom of operation. In thinly veiled references structural challenges faced by the Euro, he said that countries can’t fully enjoy open markets without agreeing to some form of shared political control. There was also an EU summit in Malta on the European refugee crisis; both big issues for sure but not market moving.

It was Veterans’ Day holiday in the US, but markets were open.  On the FX front, there was some buying interest in Sterling overnight, the best performing currency among the majors, benefiting from a further reduction in the UK unemployment rate in September quarter to 5.3%. the lowest level since 2008 and comments from BoE Chief Economist Andy Haldane suggesting he is shifting his ground towards a steady-to-higher rates from a more open view on direction.

The AUD has continued to trade in familiar territory, opening this morning towards the higher end of its recent ranges, not hurt by yesterday’s Chinese trio of activity data suggesting growth of Australia’s largest trading partner has not stepped down in net terms in October. Industrial production growth was a tenth softer however retail sales growth a tenth higher, a little more evidence of China’s economic transition to greater reliance on consumption.  Commodities have been mixed overnight. Base metal prices rose on the LME by 0.56%, copper up 0.36%, spot iron ore prices in China inched back a little, +0.7% to $48.58/t.  Oil however took another turn for the worse, WTI down 2.74% and Brent declining 3.37% ahead of EIA weekly stockpiles data tonight.  Gold eased further, down 0.43% to $1083.60/oz.

Coming up

The local market will be fixated on this morning’s employment report for October at 1130. Despite recent data validity issues, the labour market release is a significant market mover ranked in the top five as far as the AUD and short-dated yields are concerned. The market consensus is for employment to rise 15K; NAB is forecasting a stronger 25K based on continuing positive leads from labour demand indicators, including as recently as Tuesday’s NAB survey employment index which remain steady at a positive +3.  (Our internal short-term models of employment suggest our +25K forecast could be conservative so upside risk. Even in the event of a larger rise in employment, this often comes with a bounce in the participation rate limiting the fall in the monthly unemployment rate.) NAB is forecasting the unemployment rate to pull back from 6.2% to 6.1%.

First thing this morning is NZ’s manufacturing PMI, NZ food prices (8.30/8.45), both for October, followed by the NZ ANZ consumer confidence survey for November at 11.

Germany releases its final October CPI tonight, while there is EC and India’s industrial production reports for September.  India also publishes its September CPI.

In the US, labour market focus with weekly jobless claims and the J0LTS job openings reports with the potential for more central bank-focused comments with several Fed speakers including Bullard, Lacker, Evans, and Dudley along with BoE Chief Economist Andy Haldane, again.  Fed Chair Yellen is speaking, though only giving welcoming remarks at a Fed Policy Conference so likely silent on the economy and policy.

Overnight

AUD holding: Eurostoxx 600 +0.6%, Dax +0.7%, CAC +0.8%, FTSE +0.3%.  Dow -34 points to 17,724, -0.2%, S&P 500 -0.2%, Nasdaq -0.2%, VIX 15.89 +3.9%.  Shanghai +0.3%, Mumbai +0.3%, Nikkei 225 -0.2% and ASX 200 +0.5%; ASX SPI futures this morning -0.4%.  US bond yields: 2s at 0.87% (0), 10s at 2.33% (-1).  WTI oil at $43.05 (-2.6%), Brent at $45.94 (-3.2%), Malaysian Tapis (yesterday) $46.50 (-1.2%).  Gold at $1084.00/oz (-0.4%). Base metals: LME copper +0.4%, nickel +1.6%, aluminium +0.7%. Iron ore $48.6/t +0.7% Chinese steel rebar futures -0.9%. Soft commodities spot futures: wheat +0.4%, sugar -0.1%, cotton +0.5%, coffee 0.4%.  Euro CO2 emissions price (Dec 15) +0.0%. The AUD/USD’s range overnight 0.7041-0.7070; indicative range today 0.7035-0.7100; the AUD/USD is 0.7056 now

China’s industrial production (Oct, y/y) 5.6% (L: 5.7%; E: 5.8%); Retail sales (Oct, y/y) 11.0% (L: 10.9%; E: 10.9%); Fixed assets investment (Oct, y/y ytd) 10.2% (L: 10.3%; 10.2%)

UK Jobless claims change (Oct) +3.3K (L: +4.6K; +1.4K); Unemployment (Sep) 5.3% (L: 5.4%; E: 5.4%)

For full analysis, download report:

• Markets Today: 12 November 2015 (PDF,333KB)

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