Today’s Market Update: Keeping the dreams alive

It’s been a night of consolidation for currencies with the US dollar giving up some ground, the Bloomberg spot US dollar index losing 0.67% overnight.

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It’s been a night of consolidation for currencies with the US dollar giving up some ground, the Bloomberg spot US dollar index losing 0.67% overnight. Equities have been mixed with modest rise in Europe while the US market is hovering close to square in the last hour of trade. Hard commodity prices have been mixed to weaker. Maybe some repositioning of the USD after the Minutes as USD investors think more about “gradual” rate rises, even if US 2y Treasury yields rose a little on the day.

The largest beneficiary at top the board is the AUD that is up 1.17%, receiving support recently despite another bout of iron ore price volatility, back down another $0.91 overnight to $45.44, down 1.96%. The price of copper on the LME rose 0.42% but gave up 0.31% in New York trading. The one currency that did lose some ground against the US dollar was the CAD which dipped 0.29% under the weight of still soggy oil prices, West Texas intermediate down a small $0.22 to $40.53, down 0.54%.

Data on both sides of the Atlantic was inconsequential as far as markets were concerned.  UK retail sales for October fell a somewhat larger than expected 0.9% (the market was looking for a decline of 0.6 after last month’s 1.5% rise), but this didn’t seem to have much lasting effect on the Pound which also made some small ground against the USD. Providing more excuses to be somewhat defensive on the US dollar Dennis Lockhart, Atlanta Fed President was talking up the prospect of liftoff soon, but emphasising “gradual”, and that the Fed must consider using its balance as a tool.

US jobless claims were almost bang in line with expectations at 271K, suggesting a still strong US labour market, while the Philly Fed index in November pushed back into positive territory and the Leading index for October rose 0.6%.

Some interest in the Euro with the ECB releasing their October 22 Minutes along with some ECB speakers to boot. Both the wire screen headlines from the Minutes and a follow-up speech from ECB chief economist Peter Praet overnight (after a Bloomberg the day before) very much keeping the dream alive for more quantitative easing from the European Central Bank in December. Both not surprisingly talking about the risk of inflationary expectations been dislodged, the Minutes also noting that the downside risks to the inflation outlook are high. None of this however would be particularly surprising given the market moving signals from the ECB President.

Coming up

First up today we have a speech from fed vice-chair Stanley Fischer, speaking on emerging Asia at 845 AEDT.

The RBA’s Alex Heath is speaking to a resources and energy conference in Canberra this morning; she is scheduled to speak at 10:15 AEDT. No speech title is yet available. BOJ Gov Kuroda is speaking this afternoon at 6 PM AEDT, quite possibly a non-event for the market given yesterday’s dose from the BOJ.

Tonight there are more ECB speakers including President Mario Draghi, speaking at Euro finance week. On the data front, the some focus on the Canadian dollar with the release of September retail sales and October CPI after a dearth of data on the Canadian economy for most of this week.  The Fed’s Bullard is speaking tonight. There is very little data; only the Kansas City fed manufacturing index for November.

The next meaty Australian data scheduled local event that could or would be expected to influence market pricing is not now until towards the middle of next week we RBA Governor Glenn Stevens speaking to the Australian Business Economists Conference in Sydney Tuesday night. No speech title but you’d expect sure to be loaded up with the economic not policy content. Important data pieces next week with Q3 Construction Work Done and Capex ahead of GDP the week after.

Overnight

USD loses a little traction: Eurostoxx 600 +0.4%, Dax +1.1%, CAC +0.2%, FTSE +0.8%.  Dow -7 points to 17,731, -0.0%, S&P 500 -0.0%, Nasdaq -0.0%, VIX 16.69 -0.9%.  Shanghai +1.4%, Mumbai +1.4%, Nikkei 225 -0.0% and ASX 200 +2.1%; ASX SPI futures this morning +0.0%.  US bond yields: 2s at 0.89% (1), 10s at 2.25% (-3).  WTI oil at $40.53 (-0.5%), Brent at $44.26 (+0.3%), Malaysian Tapis (yesterday) $42.43 (+0.0%).  Gold at $1081.60/oz (+1.2%). Base metals: LME copper +0.4%, nickel -0.3%, aluminium -0.4%. Iron ore $45.4/t -2.0% Chinese steel rebar futures -0.1%. Soft commodities spot futures: wheat +1.3%, sugar +3.3%, cotton +0.3%, coffee 5.6%.  Euro CO2 emissions price (Dec 15) +0.6%. The AUD/USD’s range overnight 0.7154-0.7215; indicative range today 0.7170-0.7220; the AUD/USD is 0.7195 now

UK retail sales, ex-fuel (Oct) -0.9%/3.0% (L: 1.5%/5.7%; E: -0.6%/3.9%); US Jobless claims (w/e Nov 14, Nov payrolls survey week) 271K (L: 276K; E: 270K); Philly Fed survey (Nov) +1.9 (L: -4.5; E: -0.5); US Leading Index (Oct) +0.6% (L: -0.2%; E: 0.5%).

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