The forex markets are generally staying in familiar range as traders turn cautious ahead of G20 summit and, of course, the highly anticipated Trump-Xi summit. There are rumors flying around on whether there will be a deal of no deal. But it’s no to productive to guess at this point. We’ll see soon. For today, New Zealand Dollar is the strongest one. Dollar follows as it continues to pare Powell inspired losses. Euro is the weakest one for today after weaker than expected inflation and employment data. Sterling and Swiss Franc follow as the next weakest.
In other markets, major European indices are trading generally at the time of writing. FTSE is down -0.59%, DAX down -0.38%, CAC down -0.20%. German 10 year yield is down -0.012 at 0.312. Italian 10 year yield is down -0.002 at 3.199. Spread remains below 300. Earlier today, all major indices closed with gains. Nikkei rose 0.40%, Hong Kong HSI rose 0.21%, China Shanghai SSE rose 0.81%, Singapore Strait Times rose 0.26%.
Released in US session, Canadian GDP dropped -0.1% mom in September, below expectation of 0.1% mom rise. IPPI rose 0.2% mom in October while RMPI dropped -2.4% mom. Canada, Mexico and the US have just signed the USMCA agreement formally.
Euro mildly lower as inflation slowed, unemployment rate unchanged
Euro dips mildly against Dollar and Yen after weaker than expected inflation reading. But it’s so far steady against others. Eurozone headline CPI dropped to 2.0% yoy in November, down from 2.2% yoy and missed expectation of 2.0% yoy. CPI core slowed to 1.0% yoy, down from 1.1% yoy and missed expectation of 1.1% yoy.
Also Eurozone unemployment rate was unchanged at 8.1% in October, missed expectation of 8.0%. Highest unemployment rates were seen in Greece at 18.9% in August, and Spain at 14.8%.
Italian Conte and Tria working with EU to avoid excessive deficit procedure
Italian newspaper Il Messaggero reported that Prime Minister Giuseppe Conte and Economy Minister Giovanni Tria are working on a proposal to lower 2019 budget deficit target from 2.4% of GBP to 2.0%. The proposals could involve delaying the citizen’s income program by several months.
The Corriere also reported that Tria said “we can still avoid an infringement procedure”, and the coalition government is discussing the budget proposal with European Commission.
European Commission President Jean-Claude Juncker also said in a press conference that the “atmosphere is good” regarding the discussion with Italy. And, he added “we are making progress”.
Swiss KOF dropped to 99.1, foreign demand to weaken in coming months
Swiss KOF economic barometer dropped to 99.1 in November, down from 100.2 and missed expectation 99.8. It’s the second consecutive month of decline and is now below long term average again.
KOF noted that “this month’s decline was in particular due to less favourable export prospects. The impetus from foreign demand is likely to weaken somewhat in the coming months.” Also, “the development in the banking and insurance sector may lose some of its momentum.” On the other hand, there’s “slight support” from construction sector and private consumption. And, manufacturing is also “resisting downward tendency”.
Japan industrial production rose 2.9%, strongest since Jan 2015
Japan industrial production rose strongly by 2.9% mom in October, way above expectation of 1.2% mom. It’s also more than enough to reverse the -0.4% mom contraction in September. Besides, it’s the fastest month-on-month gain since January 2015. Nevertheless, it’s noted by economists that the strong reading was mainly a reaction to supply-chain disruptions caused by natural disasters. The rebound should be considered a one-off and outlook remains dim ahead on global slowdown.
Also from Japan, unemployment rate edged up to 2.4% in October, above expectation of 2.3%. Tokyo CPI core was unchanged at 1.0% yoy in November, matched expectations. Consumer confidence dropped -0.1 to 42.9 in November. Housing starts rose 0.3% yoy in October.
Released in Asian session, China PMI manufacturing dropped -0.2 to 50 in November. PMI non-manufacturing dropped -0.5 to 53.4. Australia Private sector credit rose 0.4% mom in October. New Zealand building permits rose 1.5% mom in October. UK Gfk consumer sentiment dropped -2 to -13 in November.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.1361; (P) 1.1381; (R1) 1.1415; More…..
EUR/USD weakest mildly today but it’s after all, staying in range of 1.1267/1472. Intraday bias remains neutral for the moment. On the upside, decisive break of 1.1472 resistance will complete a head and shoulder bottom pattern (ls: 1.1302; h: 1.1215; rs: 1.1267). That will indicate near term reversal and bring stronger rise back to 1.1814 resistance. On the downside, below 1.1267 will turn bias back to the downside for 1.1215 low.
In the bigger picture, down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1814 resistance is now needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.
Economic Indicators Update
GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
---|---|---|---|---|---|---|
21:45 | NZD | Building Permits M/M Oct | 1.50% | -1.50% | -1.30% | |
23:30 | JPY | Jobless Rate Oct | 2.40% | 2.30% | 2.30% | |
23:30 | JPY | Tokyo CPI Core Y/Y Nov | 1.00% | 1.00% | 1.00% | |
23:50 | JPY | Industrial Production M/M OCt P | 2.90% | 1.20% | -0.40% | |
00:01 | GBP | GfK Consumer Confidence Nov | -13 | -11 | -10 | |
00:30 | AUD | Private Sector Credit M/M Oct | 0.40% | 0.40% | 0.40% | |
01:00 | CNY | Manufacturing PMI Nov | 50 | 50.2 | 50.2 | |
01:00 | CNY | Non-manufacturing PMI Nov | 53.4 | 53.8 | 53.9 | |
05:00 | JPY | Consumer Confidence Index Nov | 42.9 | 43.3 | 43 | |
05:00 | JPY | Housing Starts Y/Y Oct | 0.30% | 0.20% | -1.50% | |
08:00 | CHF | KOF Leading Indicator Nov | 99.1 | 99.8 | 100.1 | 100.2 |
10:00 | EUR | Eurozone Unemployment Rate Oct | 8.10% | 8.00% | 8.10% | |
10:00 | EUR | Eurozone CPI Estimate Y/Y Nov | 2.00% | 2.10% | 2.20% | |
10:00 | EUR | Eurozone CPI Core Y/Y Nov A | 1.00% | 1.10% | 1.10% | |
13:30 | CAD | GDP M/M Sep | -0.10% | 0.10% | 0.10% | |
13:30 | CAD | Industrial Product Price M/M Oct | 0.20% | -0.50% | 0.10% | 0.20% |
13:30 | CAD | Raw Materials Price Index M/M Oct | -2.40% | -5.20% | -0.90% | -1.00% |
14:45 | USD | Chicago PMI Nov | 58.5 | 58.4 |