Weekly Chartbook
Canadian consumers aren’t spending. US inflation pressures are subsiding. The renminbi is stabilizing. The euro area economy is showing signs of bottoming. Technicals support further gains.
EUR
Blue Monday follows Black Friday
Markets are kicking off the week on a more cautious footing after Chinese data disappointed relative to expectations, pointing to a stronger disinflationary impulse from the world’s second-largest economy. Industrial profits increased just 2.7 percent from a year ago in October, according to numbers published by the National Bureau of Statistics, down from September’s 11.9 percent and August’s 17.2 percent as global demand weakens and a domestic recovery runs out of momentum. Ten-year Treasury yields are holding near the highest levels in a week, equity futures are retreating, and the dollar is stabilizing as demand for commodity-linked units and emerging-market...
AUD faces some data challenges
• Trends extend. European equities ticked up, bond yields rose. Oil gave back ground. Iron ore elevated. AUD at the top of its multi-month range.• Weaker USD. USD remains under pressure. USD index is near where it started the year. Factors that propelled the USD higher have changed course.• Event radar. Locally, retail sales & monthly CPI are due. Offshore, US PCE deflator, manufacturing ISM, China PMIs & Eurozone inflation are released. It was a fairly quiet end to last week across markets with the US having a holiday shortened session on Friday following the Thanksgiving break. European equities ticked...
Holiday markets
• Quiet markets. US closed for Thanksgiving. European equities ticked up & bond yields rose. FX moves limited. AUD hovering near multi-month highs.• PMIs. Eurozone & UK PMIs a bit better than expected. Eurozone still in the ‘contraction’ zone but momentum looks to be stabilising.• Data quirks. Locally, retail sales & monthly CPI due next week. We think sales may fall & the CPI indicator may send a false signal. Near-term risks for the AUD. With the US on holiday celebrating Thanksgiving markets have been fairly quiet. This is likely to remain the case today given reduced activity in the...
RBA’s inflation challenge
• Mixed markets. US equities rose & bond yields edged up slightly. Oil eased back. USD a bit firmer. RBA rhetoric an offset for the AUD.• Volatile data. Weekly US jobless claims data a little better than expected. But some seasonal factors suggest it may not last. Eurozone PMIs due tonight.• RBA speak. Gov. Bullock delivered another speech & comments around inflation sounded hawkish. Diverging policy expectations are AUD supportive. Market volatility picked up slightly overnight as participants reacted to some partial US economic data and looked to lighten positions ahead of the Thanksgiving holiday period. The US and Japan...