A lot of the attention overnight remained centred on the commodity space with oil prices down another 1%, Brent crude at $39.70, down 0.97%. Not surprising then that the oil-linked currencies were mostly sold lower including the Canadian dollar which lower by around 0.5% in the Norwegian kroner by 0.4%, although the Russian rouble was steadier. OPEC announced that its crude oil production was at a three year high in November as it presses on with high levels of output to further pressure the US shale industry, not to mention the unit returns it’s earning in the meantime.

The AUD held on to most of the gains that quickly followed after yet another super-sized Australian employment report, even though most of the rise reflected sample rotation rather than a further surge in employment in the matched sample. Even so, there is no denying that unemployment has surprised on the low side consistently this year despite the chill winds from continuing pressure in the resources base the economy is held up a lot better than feared for forecast. The local interest rate market is pricing for 12 basis points of easing over the next year; in other words an unchanged view on rates with a mild easing bias.

Elsewhere in the commodity space overnight, it’s been mixed-to-negative commodity fundamental news for the Aussie overnight with iron ore back down again to $38.52, a new cyclical low, more than countering yesterday’s rise, while LME copper prices rose 0.22% despite some USD resilience while gold eased 0.44%.

After rising in the wake of the RBNZ rate cut and steady rate outlook yesterday, the NZD/USD held on to its gains overnight. The RBNZ will not be pleased with the currency’s response making clear yesterday its displeasure currency at current levels believing/hoping the NZD will weaken to help balance the economy.

The USD strengthened against a softer EUR overnight, while the GBP experienced some volatility around the Bank of England’s meeting. But the Bank stuck closely to its script, saying low oil prices and subdued wage growth would keep a lid on inflation, limiting any urgency to raise rates. Having traded a wide range around the meeting, the GBP/USD has returned to trade at 1.5170.

Coming up

There’s a trio of New Zealand releases this morning starting with the PMI manufacturing reported 830, food prices at 845 and then at 11 AM AEDT, consumer confidence is released. On past records, none should trouble the scorers too much at all.

There are no other scheduled releases separate day although Chinese figures for November have been due any day now so could be released in the day or possibly over the weekend or early next week. The key Chinese activity numbers for November are being released tomorrow, retail sales, industrial production, and fixed assets investment.

Focus tonight’s well and truly on the US is markets last-minute positioning ahead of the Fed announcement at the end of their Tuesday-Wednesday meeting coming at 6 AM Thursday morning our time when lift-off is expected to be announced. Much of the focus will be on the new forecasts from the Fed, its dot point rate forecast diagram, and of course the tone of Janet Yellen’s press conference.

Two key US data releases tonight with US retail sales for November with someone higher pay for spending tipped, headline sales expected to grow by 0.2 and the “control group” forecast grow by .4 up 1/10 and 2/10 respectively from October. The University of Michigan preliminary survey of consumer sentiment index for December is also due.

Overnight

Commodities lower again; AUD post-employment gains stick: Eurostoxx 600 -0.3%, Dax +0.1%, CAC -0.1%, FTSE -0.6%. Dow +163 points to 17,655, +0.9%, S&P 500 +0.9%, Nasdaq +0.9%, VIX 18.46 -5.9%. Shanghai -0.5%, Mumbai -0.5%, Nikkei 225 +0.9% and ASX 200 -0.8%; ASX SPI futures this morning +0.2%. US bond yields: 2s at 0.94% (2), 10s at 2.24% (+2). WTI oil at $36.71 (-1.2%), Brent at $39.68 (-1.1%), Malaysian Tapis (yesterday) $40.57 (+0.0%). Gold at $1071.60/oz (-0.5%). Base metals: LME copper +0.2%, nickel -1.8%, aluminium +0.1%. Iron ore $38.5/t -1.4% Chinese steel rebar futures -0.4%. Soft commodities spot futures: wheat +1.1%, sugar -3.6%, cotton -1.6%, coffee -0.4%. Euro CO2 emissions price (Dec 15) -0.5%. The AUD/USD’s range overnight 0.7275-0.7313; indicative range today 0.7265-0.7315; the AUD/USD is 0.7289 now
UK trade (Oct) -£4.14bn (L: -£1.073bn; F: -£-1.8bn)

Canada Capacity Utilisation (Q3) 82.0% (L: 81.4; F: 82.0); New house prices (Oct) +0.3% (L: 0.1%; E: 0.1%)

US Jobless claims (w/e 28 Nov) 282K (L: 269K; E: 270K)

Good luck.

For full analysis, download report:

• Markets Today: 11 December 2015, (PDF, 307KB)

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