Major breaks not likely until next week.


Major Headlines – Previous Session

  • UK GDP YoY (3Q P) out at -5.1% as expected.

  • US Personal Income MoM (Oct) out at 0.2% vs. 0.1% expected.

  • US Personal Spending MoM (Oct) out at 0.7% vs. 0.5% expected.

  • US PCE Deflator YoY (Oct) out at 0.2% vs. 0.1% expected.

  • US Durable Goods Orders MoM (Oct) out at -0.6% vs. 0.5% expected.

  • US Durable Ex Transportation MoM (Oct) out at -1.3% vs. 0.7% expected.

  • US Initial Jobless Claims out at 466K vs. 500K expected.

  • US Continuing Claims out at 5423K vs. 5565K expected.

  • US U. of Michigan Confidence (Nov F) out at 67.4 vs. 67 expected.

  • US New Home Sales (Oct) out at 430K vs. 404K expected.

  • AU Private Capital Expenditures (3Q) out at -3.9% vs. 1.0% expected.

  • SW Trade Balance Kroner (Oct) out at 5.1B vs. 9.5B expected.

  • NO Unemployment Rate (Nov) out at 2.6% as expected.


Themes to watch – upcoming session:

  • No time given: GE CPI MoM (Nov P) expected at 0.0%.

  • 21:45 – NZ Trade Balance (Oct) expected at -480M.

  • 23:30 – JN Jobless Rate (Oct) expected at 5.4%

  • 23:30 – JN Job-To-Applicant Ratio (Oct) expected at 0.44.

  • 23:30 – JN National CPI YoY (Oct) expected at -2.4%.

  • 23:30 – JN Retail Trade MoM (Oct) expected at -0.9%.

The market is in “pull-back mode” after the USD broke key supports vs. JPY and EUR on Wednesday. The reason is probably Thanksgiving and the thin and spiky market conditions towards the weekend. We will be careful and not read too much from the technical developments in this time span, but here are things as we see them:

EURUSD was retracing after a very strong Wednesday where it broke key resistance (October high, 1.5063).
The reason was the confusing and dovish FOMC minutes, which due to unrealistically low expectations for the US unemployment AND low rate expectations virtually assured the market that US monetary policy would be lax for an even longer period of time than previously thought.

USDJPY: Despite the ailing Japanese economy, it seems that the market is still focusing on the new governments comments about the strength of JPY (tolerable). In this sense, the JPY is working as a reserve CNY or a safety valve on the stressed USDCNY.

GBP: The honeymoon relief seems to be over. The trade-weighted index is down more than 2.5% in the past two weeks, probably due to the still miserable GDP figures (even in Q3 where most other countries turned positive) and the continuation of the Carry Trade funded by the usual, high financial sector to GDP currencies: GBP and USD. Even with the pull-back in the USD today, the GBP is underperforming. It looks like GBPJPY will test 140 key support within the next week, but beware the host of Japanese data tonight.

Looking at EM currencies, the USD pull-back has left them weaker. Especially USDMXN showed some potential downside below the 12.80 level when searching for a potential break lower. It now looks like we will have to wait until next week for such a move lower.