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.
USD
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...
Tryptophan-addled markets move sideways
Currency market liquidity is thinner than a Wegovy patient at a Thanksgiving dinner, with choppy price action leaving most major pairs effectively unchanged relative to Wednesday levels. Equity futures are pointing to a subdued holiday session, ten-year Treasury yields are holding at 4.46 percent, and trade-weighted measures of the dollar are staying stable as traders keep positions square into the weekend. The Japanese yen is holding just north of 149 against the dollar after updated inflation numbers came in slightly below expectations, further diminishing odds on an imminent shift away from the central bank’s easy-money policies. Consumer prices excluding fresh...
USD losing its shine
We began to be more vocal about our thoughts the USD (and resultant weakness in the AUD) was looking on shaky foundations and was set to reverse course in mid-September (see Market Musings: AUD: Always darkest before the dawn). In hindsight we were a few weeks early, but nevertheless the macro landscape has evolved as we predicted causing the USD to lose ground (and the AUD to rebound) over the past month or so. As it was stressed at the start of my career, in financial markets it is better to make the right calls early, rather than hold the...