USD Declines Amid Fed Decision, Stimulus Talks Continue

General Trend

• Gainers in Australia include Energy, Resources and Financial firms
• Topix Marine Transportation and Information/Communication indices rise in Japan; Decliners include Air Transportation, Iron/Steel and Real Estate firms
• Hang Seng TECH index rises, Financial and Property indices decline
• Early gainers in Shanghai included Consumer Staples and Industrials, IT shares lagged
• USD/CNH tested 6.50
• China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.
• BOJ rate decision due on Friday (Dec 18th)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU) AUSTRALIA NOV EMPLOYMENT CHANGE: 90.0K V +40.0KE; UNEMPLOYMENT RATE: 6.8% V 7.0%E
• (AU) Australia Treasurer Frydenberg issues Mid-Year Economic and Fiscal Outlook: Australia economy is rebounding strongly; improves FY20/21 budget deficit forecast to A$197.7B v A$213.7B prior; Names Carolyn Hewson and Alison Watkins to the RBA board
• (AU) Reserve Bank of Australia (RBA) to buy A$2.0B in Govt bonds v A$4.0B prior
• (NZ) NEW ZEALAND Q3 GDP Q/Q: +14.0% V +12.9%E; Y/Y: 0.4% V -1.8%E
• (NZ) New Zealand Fin Min Robertson: No great discomfort with level of NZD, NZD gain reflects economy strength; Unease with debt to income ratios
• (NZ) New Zealand Debt Management Office (DMO) sells NZ$600M v NZ$600M indicated 2024, 2031, and 2041 bonds
• WPP.AU Confirms WPP raised offer to A$0.70/shr (prior A$0.55/shr); Guides FY20 Rev A$607-610M, FY21 Rev A$630-650M

Japan

• Nikkei 225 opened flat
• (JP) Japan press reiterates that FY21/22 budget to be ~¥106T (fresh record high for 9th consecutive year); bond issuance also expected to be higher y/y, for the first time in 11-years – Nikkei
• (JP) Japan said to revise FY20 GDP to -5.0% from -4.5% prior; said to raise forecast for 2021 GDP growth to 4.0% v 3.4% prior – Nikkei
• (JP) Tokyo said to consider raising virus alert level to highest level, warning that medical situation is severe – Nikkei
• (JP) Tokyo, Japan coronavirus cases said to be at a record high today – Press
• (JP) Japan Nov Tokyo Condominiums for Sale Y/Y: -15.3% v +67.3% prior

Korea

• Kospi opened -0.1%
• (KR) South Korea extends $60B bilateral currency swap deal by additional 6-months due to pandemic
• (KR) South Korea Finance Ministry cuts 2020 GDP forecast from +0.1% to -1.1%; Cut 2021 GDP growth forecast to 3.2% v 3.6% prior

China/Hong Kong

• Hang Seng opened +0.6%; Shanghai Composite opened flat
• (CN) China PBOC sets Yuan reference rate: 6.5362 v 6.5355 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v Injects CNY10B in 7-day reverse repos prior; Net drain CNY0B v Net drain CNY10B prior
• (HK) Hong Kong Monetary Authority (HKMA): China PBoC to issue CNY10B in bills in Hong Kong on Dec 23rd

Other

• *(SG) SINGAPORE NOV NON-OIL DOMESTIC EXPORTS M/M: 3.8% V 8.7%E; Y/Y: -4.9% V +0.3%E
• (TH) Thailand Central Bank (BoT): Has no policy to intervene into THB to achieve trade benefit

North America

• (US) House Maj Leader Hoyer: another stopgap spending bill will be necessary
• (CN) USTR Lighthizer: Biden should keep pressing China to stick to the “Phase 1” trade deal, which Beijing has done a “reasonably good job” implementing parts of, using tariffs as leverage; China is well behind on its purchase commitments, partly due to the pandemic
• (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); MAKES NO CHANGE TO COMPOSITION AND PACE OF ASSET PURCHASES
• (US) Fed Chair Powell: monetary policy will continue to deliver powerful support to economy – post rate decision prepared remarks
• (US) Fed Chair Powell: today we are not going to identify “substantial progress” with specific numbers or levels – Q&A
• (US) TREASURY SEMI-ANNUAL FOREIGN EXCHANGE REPORT: designates Vietnam and Switzerland as currency manipulators; adds India, Thailand, and Taiwan on the currency watch list ; Would be concerned if china starts intervening in currency markets again to hold down yuan
• (US) Sen Maj Leader McConnell: we are still talking and I think we’re going to get there on COVID relief
• (US) Capitol Hill negotiators are reportedly on the brink of a $900B coronavirus rescue package; would include a new round of direct payments, but would leave out state and local aid, and a liability shield; deal could come as early as this morning – Politico

Europe

• (IT) Bank of Italy recommends less significant banks not pay dividends until Sept 30th, 2021 – press
• (UK) PM Johnson spokesperson: we expect Brexit talks to continue over the coming days; could recall Parliament next week to ratify a deal if there is one
• (EU) RTE’s Connelly: For Brexit, while both sides have a way to go, on the level playing field/state aid there is a landing zone in sight. On fisheries, both sides say that is “very difficult”
• (UK) UK and US said to have signed customs agreement to ensure continued free trade

Levels as of 00:20 ET

• Nikkei 225, +0.2%, ASX 200 +1.2% , Hang Seng +0.2%; Shanghai Composite +0.7% ; Kospi -0.3%
• Equity S&P500 Futures: +0.3%; Nasdaq100 +0.3%, Dax +0.2%
• EUR 1.2235-1.2181 ; JPY 103.56-103.24 ; AUD 0.7594-0.7566 ;NZD 0.7141-0.7083
• Gold +0.7% at $1,871/oz; Crude Oil +1% at $48.30/brl; Copper +0.3% at $3.5783/lb