The JPY and NZD share equal top spot in terms of 24 hour FX performance, confirming the absence of any real rhyme or reason to this market.  US stocks are close to flat heading into the close with energy and materials stocks the underperformers after oil gave back a little of its recent strength, but consumer stocks up on reports of good Black Friday sales.  US bond yields are a touch lower at 10 years but still very much ‘home on the range’ (i.e. holding above 2.30%).

Quiet market are being compounded by the fact that we are still in front of all the week’s key event risks, one of which is the Senate confirmation hearing of Fed chair designate Jerome Powell later today.  The Senate will be asking the question The Who did in their 1978 Classic “Who are you?”  The overall impression Powell chooses to convey will likely be a line from an earlier (1971) Who hit “Won’t Get Fooled Again”, i.e. “Meet the new boss, the same as the old boss”.

We’ve already heard from one Fed speaker in the last couple of hours, Dallas Fed President Robert Kaplan – a current FOMC voter.  “If we wait too long to see actual evidence of inflation, we may get behind the curve and have to subsequently raise rates more rapidly,” Kaplan wrote in an essay. “This type of rapid rate rise has the potential to increase the risk of recession.” Kaplan also indicated he sees possible imbalances in the financial markets, as well as the risks of an overheating labour market, as outweighing the chance that inflation could continue to under-run the Fed’s 2% goal.

Not so much an essay as now 280-character tweet, POTUS has been out saying “The Tax Bill is coming along very well, great support.  With just a few change, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!”

More pertinent perhaps, US Republican Senator Orrin Hatch (who chairs the tax writing committee) and the No.2 Republican in the chamber, Senate Majority Whip John Coryn, have been out saying the Senate is likely to vote on a tax bill this week, both of them expressing hope of getting a unified tax bill passed by Christmas.

The US dollar looks to have drawn a little support from tax bill optimism – as well as the Kaplan comments – having earlier in the day gained a small lift from news that US New Home sales surged by 6.2% in October against expectations for a fall of 6.3%. The Dallas Fed’s manufacturing activity reading meanwhile fell to 19.4 from 27.6, but shouldn’t mean much as far as Friday’s ISM manufacturing survey goes.

AUD/USD made it to as high as 0.7645 in the London morning largely in the context of a softer US dollar, but has since given it all back to trade close to 0.76, on a combination of a mini-USD revival and, in seems, some direct selling of AUD/NZD which pulled the cross down to as low as 1.10 from above 1.1080 earlier in the session.

Coming Up

After a slow start to the week, the first of the week’s keynote event risks kick in tonight’s when Fed chair designate Jerome (Jay) Powell is up before the Senate for his confirmation hearing.  This is slated to start at 2:00 AEDT Wednesday but will be early enough for the European as well as US market to pounce on his every word.

Senate questioning might revolve around his ‘vision’ for the Fed, views on accountability and communications strategy, etc. Yet doubtless he will also be quizzed on such matters as his view of whether weak inflation this year is largely the result of transitory factors (after last week’s FOMC minutes revealed creeping Fed doubts that they were).

Perhaps as or even more important for stock market, will be his replies to questions about where his support lies – or doesn’t – with respect to unwinding of various aspec8 ‘You’re fired’ by the President, she has been somewhat less circumspect than previously in some of her remarks.

Before all this at 11:00 AEDT, outgoing NY Fed President is due to speak on ‘The US economy, 10 years after the crises’.   Philly Fed president Patrick Harker also speaks.

The data calendar in very much second tier today. The BoC’s Poloz and Wilkins are scheduled to hold a press conference linked to their latest Financial Stability Review.

Overnight

On global stock markets, the S&P 500 was -0.00%. Bond markets saw US 10-years -1.77bp to 2.32%. In commodities, Brent crude oil +0.03% to $63.88, gold+0.6% to $1,294, iron ore -1.0% to $67.27, steam coal +1.4% to $95.05, met. coal -0.3% to $190.00. AUD is at 0.7607 and the range since yesterday 5pm Sydney time is 0.7593 to 0.7645.

 For full analysis, download the report:

• Markets Today: 28 November 2017 (PDF, 116kb)

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

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