Dollar's rally continues in Asian session on firm expectation of December Fed hike. Fed vice chair Stanley Fischer spoke for the first time since election on Friday. He said that "the case for removing accommodation gradually is quite strong". Last week's rallies in stocks, yield and dollar were triggered by expectation that president-elect Donald Trump would push for a more expansive fiscal policy including increased spending and lower taxes. Fischer said it's many FOMC members agreed that "it would be useful to have a more expansionary fiscal policy. And, more expansive fiscal policy will "ease the task of monetary policy" and increase the neutral rate. Dollar index is trading at 99.40 at the time of writing and is heading to key resistance zone at 100.39/51.
The Japanese yen extends recent decline in Asian session and stays as the weakest one for the month. The Yen is under much selling pressure on risk appetite and surging yields. BoJ governor Haruhiko Kuroda urged companies to make "proactive investment in human capital" and adjust wages based on the "2% inflation benchmark". Meanwhile, he noted that the momentum towards achieving the 2% inflation target is "somewhat weaker". But he pledged that "the BOJ will pursue powerful monetary easing and make policy adjustments as appropriate, taking into account economic, price and financial developments, to maintain the momentum toward achieving 2 percent inflation." .
On the data front, Japan GDP grew 0.5% qoq in Q3, above expectation of 0.2% qoq. GDP deflator dropped -0.1% yoy in Q3. China industrial production rose 6.1% yoy in October, below expectation of 6.2% yoy. Retail sales rose 10.0% yoy, below expectation of 10.7% yoy. But fixed asset investments rose 8.3% yoy, above expectation of 8.2% yoy. Swiss PPI and Eurozone industrial production will be featured later in the day. Looking ahead, focuses will turn back to economic data releases this week. Here are some highlights:
- Tuesday: New Zealand retail sales; RBA minutes; UK CPI and PPI; Eurozone GDP, German ZEW; US retail sales, Empire state manufacturing, import prices, business inventories
- Wednesday: Australia wage price; UK employment; Swiss ZEW; Canada manufacturing sales; US PPI, industrial production, NAHB housing
- Thursday: New Zealand PPI; Australia employment; UK retail sales; US CPI, Philly Fed survey, jobless claims, housing starts
- Friday: German PPI, Eurozone current account; Canada CPI