Market Brief
In the Asian session most regional equity markets traded range-bound ahead of a fresh batch of Chinese economic data. The data weren’t very helpful as they came in pretty mixed. Retails sales printed at 11%y/y versus 10.9% expected and previous read while industrial production came in below expectations at 5.6%y/y versus 5.8% consensus. Data clearly indicates that the Chinese economy is struggling to maintain the pace in spite of repeated intervention by the PBoC. Another round of Chinese data are due later today around lunch time: New Luan Loans, Money Supply and FDI. The Shanghai Composite edged up 0.28% while the tech-heavy Shenzhen Composite soared 1.97%.
In Japan, data continues to come on the soft side. Preliminary estimates indicate that machine tool orders contracted by 23.1%y/y in October after a drop of 19.1% in the previous month. On a month-over-month basis, the indicator fell 6.3% on weak Chinese demand. However, the market was prepared for such outcome; after all, investors are well aware that the Japanese economic machine is jammed and that the BoJ’s is fooling no one with its overly optimistic comments. USD/JPY lost some ground in Tokyo but found a strong support at around 123. From our standpoint, the risk remains on the downside for the yen, we therefore maintain our bullish view on USD/JPY. On the equity front, the Nikkei 225 edged up 0.10% and the TOPIX increased 0.37%.
Australia’s Westpac consumer confidence index advanced 3.9%m/m (s.a.) in November after an increase of 4.2% in the previous month. Consumer confidence continues to improve as the Aussie economy is showing signs of stabilisation against the backdrop of falling global demand for commodities, especially from its biggest trade partner, namely China. Yet the pace of increase is slowing. AUD/USD enjoyed a nice ride in the Tokyo as it climbed to 0.7078, up 0.75%. We are cautious ahead of US data due on Friday as a better-than-expected reading could fuel further the expectations for a December rate hike, which would weighed heavily on the pair. Shares rose 0.46% in Sydney.
In the wake of the astonishing NFP report, EUR/USD is moving sideways between 1.0675 and 1.08 as traders await the next round of economic data from the world’s biggest economy. Next week CPI report will gather a lot of traction as sign of pick-up will be interpreted by investors as a clear sign for lift-off in December.
Today traders will be watching ILO unemployment rate and jobless claims from the UK; MBA mortgage application from the US; Business manufacturing and food prices form New Zealand.
Currency Tech
EUR/USD
R 2: 1.1387
R 1: 1.1095
CURRENT: 1.0756
S 1: 1.0458
S 2: 1.0000
GBP/USD
R 2: 1.5508
R 1: 1.5219
CURRENT: 1.5163
S 1: 1.5027
S 2: 1.4566
USD/JPY
R 2: 135.15
R 1: 125.86
CURRENT: 123.08
S 1: 120.07
S 2: 118.07
USD/CHF
R 2: 1.0240
R 1: 1.0129
CURRENT: 1.0037
S 1: 0.9739
S 2: 0.9476