That selling continued in the immediate aftermath of yesterday’s FOMC Minutes.  The USD has fallen a further 0.3% since this time yesterday, most just after the Minutes that were also tinged with the uncertain inflation outlook.

The AUD has been supported above 0.76, in a range of from just above the figure into the 7630s.  Commodity prices have been supportive overnight, especially iron ore that rose another sizeable $2.52/t, up 8.1% this week and 15.9% so far this month.  Quite surprising given the cuts announced to steel and heavy industry in China to address pollution into the winter.  Base metals were also a little higher, Dr. Copper up 0.13%, WTI oil +0.93%, but gold down 0.12% to $1295/oz.

With the USD on the defensive (it’s also the US Thanksgiving Day holiday), the Euro has found support from another very strong set of numbers.  There’s also an emerging likelihood Merkel may be able to put together an alternative grand coalition with the Social Democrats and forestall the need for another election.

The Euro’s supported came overnight from even stronger Eurozone PMIs for November. The Euro is up 0.3% since this time yesterday, having continued to win further incremental support through the overnight session.

While Germany’s Q3 GDP was not revised from its flash 0.8%/2.8% reading, the November PMIs again rose from already elevated levels.  Germany’s Manufacturing PMI came in at 62.5 in November, up from 60.6, the Services sector at 54.9 from 54.7, suggesting that German export/industrial growth is leading the economy and continuing on through the last quarter of the year.  The market would not be surprised should tonight’s German Ifo Survey (that has already been shooting the lights out this year (see enclosed chart) stepped up again in November.

It was a not dissimilar picture for France with a manufacturing PMI of 57.5 in November and a Services PMI of 60.2.  The Eurozone economy is well and truly up and running at a solid clip.

The ECB’s Villeroy and Coeure have been speaking overnight.  They have been talking about the strong self-sustaining growth upturn in the Eurozone, but not publically pushing back hard against the ECB’s very accommodative monetary policy stance.

Banque de France Governor Villeroy was speaking in London, saying that all preparations need to be made to avoid a cliff-edge Brexit.  He commented that the PMI surveys are “good news” for the Eurozone, but that the ECB must maintain an ample degree of monetary stimulus, which could be interpreted many ways depending on what ample means.  Coeure said that Euro area recovery is robust and homogenous, that the internal demand driven upturn is “satisfying”, but his view is that the ECB deposit rate of -0.4% will stay at that rate for a long time.

The USD was losing some ground against Sterling too, though with no specific Sterling-side spur.  There was with no revision to the UK’s second estimate of Q3 GDP (0.4%/1.5%) coming with a strong CBI Retailing Survey in November, though it’s been put to one side having been hugely volatile month-to-month.

Price action in the Canadian dollar has been choppier. After making up some ground against the USD, a weaker than expected print on Sep Canadian retail sales (+0.1% cf +1.0% expected) scuppered that support.

Coming up

First up is NZ trade for October; there’s barely been any reaction to this number for quite some time.  In what’s expected to be a relatively quiet session, Japan has its preliminary Manufacturing PMI for November (L: 52.8).

There are more ECB speakers tonight (Nuoy, Constancio, and Coeure again) and that’s about it for the week, with the US shoppers still taking advantage of Black Friday sales.  Congress is taking a break before the Senate endeavours to craft and pass its tax reform legislation next week.  In an almost vacant calendar for US data releases tonight there is the Markit versions of the US PMIs, the official ISMs out next week with payrolls.

Overnight

On global stock markets, the S&P 500 was +0.00%. Bond markets saw US 10-years -3.72bp to 2.32%. In commodities, Brent crude oil +0.36% to $63.55, gold-0.1% to $1,291, iron ore +3.9% to $67.69, steam coal -0.1% to $96.10, met. coal +0.0% to $190.25. AUD is at 0.7624 and the range since yesterday 5pm Sydney time is 0.7621 to 0.7639.

For full analysis, download the report:

• Markets Today: 24 November 2017 (PDF, 124kb)

For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets

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