Currency Updates:
AUD/USD drifted up off the bottom after holding another run at Wednesday’s .8480 lows, but remains a favorite target of the bears as commodity weakness spreads beyond oil. Metals and mining sectors got hammered, suggesting that behind the OPEC headlines there is a broader demand problem certain to hang around the neck of materials exporting countries. That easing moves by the PBOC, ECB and BOJ have had no impact on commodity prices has to be of some concern to the RBA, which may get its wish for a lower currency, but undoubtedly with some unpleasant and unintended consequences.
EUR/USD opened New York 1.2474, +6 pips vs last night’s close and -31 pips from Wednesday’s NY close. The OPEC meetings inability to agree on production cuts boosted the DXY overseas, it opened NY +0.44% and is closing the session +0.83%. EUR/USD looks set to close c 1.2435/40 having traded a choppy 1.2426/90. No US stats left the market vulnerable to cross influences and USD/CAD buying due to the weak commodity complex and soft oil triggered stops in EUR/CAD which is closing the session +0.70/0.75%. Oil prices – 9.6% WTI & -2.6% Brent forced corrections in other commodity currencies, most notably EUR/NOK +1.0/1.05%, EUR/USD closing 1.2434.
USD/JPY The USD was well bought and the yen well sold to close the week, driving USD/JPY beyond recent range-trading and exporter offers at 118.45-60 ahead of the London close and an early close in the States. Stops were run above 118.50. Exporters, who had several chances to sell in the mid 118.00 recently, had less to do today. The abbreviated US session and month-end truncated an attempt to retest the 118.98 trend highs from the 20th and the barriers/stops just beyond. Tsys were again in strong demand and data through mid-Japanese FY show the US remains by far the favored destination for Japanese real money investors. This week’s Tsy auctions featured massive indirect bidding that suggested foreign demand remains brisk, even if the weekly Japanese investment flow data haven’t shown that the last few weeks. That data have shown strong foreign demand for Japanese stocks, which remain highly positively correlated with USD/JPY. Mixed Japanese econ data today point to the need for ongoing QQE, which remains the primary driver of yen weakness. EUR/JPY ran stops above the last four days’ highs, but 148 couldn’t be cleared. Commodity crosses lagged.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Terms of Trade QQ* Q3 f/c -4.8%, 0.30%-prev
• 21:45 NZ Terms of Trade – Exports* Q3 f/c -4.6%, -2.00%-prev
• 21:45 NZ Terms of Trade – Exp Vol* Q3 -5.30%, -prev
• 21:45 NZ Terms of Trade – Imports* Q3 f/c -0.8%, -2.30%-prev
• 22:30 AU AIG Manufacturing Index Nov 49.40-prev
• 00:30 AU Gross Company Profits* Q3 f/c -1.2%, -6.90%-prev
• 00:30 AU Company Profits Pre-Tax* Q3 -15.60%-prev
• 00:30 AU Business Inventories* Q3 f/c 0.2%, 0.80%-prev
• 23:50 JP Business Capex (MOF) YY* Q3 3%-prev
• 01:00 CN NBS Manufacturing PMI* Nov f/c 50.6, 50.8-prev
• 01:45 CN HSBC Mfg PMI Final Nov 50-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
