The bearish mood in Asia yesterday reversed overnight and Asia stepped in today, scratching their collective heads. The reversal overnight and today’s US Thanksgiving holiday left currency markets in a mildly comatose state.
We did have a data release to monitor – the HSBC flash China manufacturing PMI. The preliminary reading jumped to 50.4 from the final 49.5 last month, its first foray above the key 50 threshold in 13 months. The output sub-index rose to 51.3, its highest since Oct 2011 and all other sub-indices, except output prices, posted a concurrent improvement. The final reading is due on December 1.
The better data helped equity markets consolidate gains (and Shanghai shares pared losses, the only Asian bourse still in the red) but currency markets showed muted reaction – even the AUD struggled to make it past 1.04 versus the US dollar.
In a WSJ interview, San Francisco Fed president Williams said that the Fed isn't near a limit on how many Treasuries or mortgage backed securities it can purchase. The renowned FOMC dove brushed aside concerns that Fed buying activity in these markets would eventually lead to liquidity issues and prevent them from functioning properly, by saying it wasn't close to causing such problems. Williams followed up by saying that he wanted to keep buying USD 85bln per month of long term securities and MBS in 2013, and noted that any stopping or scaling back of the present pace would be counterproductive for the economy.
The eve of Thanksgiving trade overnight was relatively calm with the JPY extending its recent losses on election/easing expectations. EUR/USD recovered from key support around the 1.2750 level and a short squeeze ensued. GBP/USD also bounced off its 100-day MA with BOE minutes revealing a 9-0 vote on leaving rates unchanged and 8-1 on QE.
US data releases were mixed with early jobless claims as expected (though still high due to super-storm Sandy) at 410k. The weekly consumer comfort index was barely changed at -33.9 from -33.1 although November’s economic expectations index jumped to +4 from -7.
This was countered by a slide in the final Michigan confidence index to 82.7 from 84.9 at the first estimate. US leading indicators were better than expected at +0.2 percent m/m from +0.5 percent last month. Wall Street was in the positive for most of the session though pre-Thanksgiving profit-taking brought the indices off their highs into the close.
Happy Thanksgiving to all our US readers.
Data Highlights
- US MBA Mortgage Applications out at -2.2% vs. +12.6% prior
- US Initial Jobless Claims out at 410k, as expected vs. revised 451k prior
- US Continuing Claims out at 3337k vs. 3345k expected vs. revised 3367k prior
- US November Markit US PMI Preliminary out at 52.4 vs. 51.0 expected and 51.0 prior
- CA October Teranet/National Bank House Price Index out at -0.2% m/m, +3.4% y/y vs. -0.4%/+3.6% prior resp.
- US Bloomberg Consumer Comfort Index out at -33.9 vs. -33.1 prior
- US Bloomberg Economic Expectations Index out at +4 vs. -7 prior
- US November Final Michigan Confidence out at 82.7 vs. 84.5 expected and 84.9 prior
- US October Leading Indicators out at +0.2% m/m vs. 0.1% expected and revised 0.5% prior
- China November HSBC Flash Manufacturing PMI out at 50.4 vs. 49.5 prior
(All Times GMT)
- JP Supermarket Sales (0500)
- GE Advance PMI Manufacturing/Services (0830)
- EU Advance PMI manufacturing/Services (0900)
- UK CBI Trends Total Orders/Selling Prices (1100)
- CA Retail Sales (1330)
- EU Eurozone Consumer Confidence (1500)