Asian FX Outlook: Flynn's noise behind, U-turn in USD on GOP tax bill


Market focus

USD trades higher following the faulty ABC report on former National Security adviser Flynn. The news agency mistakenly states Flynn was given orders to contact Russian officials pre-election vs post-election.

Flynn pledged guilty to have lied to the FBI and is willing to testify over conversations with Russia's ambassador, noting that he is now ready to fully cooperate with the special counsel's office against Trump. 

USD boosted by the passing of the US tax reform package late on Friday, which should provide further support for the currency this Monday.

 

Upcoming events

At 00 GMT, Australia publishes its MI inflation gauge report for Nov

At 00.30 GMT, Australia Q3 business inventories and gross company profits are due. The figures are expected to recover from the slide seen last quarter. 

At 00.30 GMT, Australia's job advertisements MoM for Oct is released. 

At 5 GMT, Japan will release the latest data on consumer confidence. 

At 00:00 GMT, Fed's Randal Quarles speaks in New York.

At 04:00 GMT, BOJ's Kuroda and ECB's Villeroy speak in Tokyo.


A look at FX majors

EUR/USD has opened lower in Asia but remain within the context of a potential 3rd wave higher, with the printing of Thursday's bullish outside day keeping risks titled to the upside. 

GBP/USD remains on a healthy uptrend despite the higher USD on the passing of the Republican tax bill package. Buying on dips remains the most sensible strategy as per technicals.  

USD/JPY remains buoyant on US stocks and the passage of the Republican tax bill. After the rejection of lower levels on Friday, the present traction suggests 113.00 as next target. 

AUD/USD appears to be carving out a potential bottom as sellers failed to re-test recent trend lows. Acceptance above 0.76 would be further evidence of buyers temporarily taking over short-term.  

USD/CAD was the big mover last Friday, following a blockbuster Canadian employment report. The exchange rate sits around 1.27 key support area, with the NY close suggesting potential for more downside short-term as no profits were taken. 


What happened?

US Nov Markit Manuf PMI final reading came at 53.9 vs 53.8 prev. 

US Nov ISM Manufacturing PMI came 58.2, 58.4 exp, 58.7 prev. As per the sub-components, the prices paid came at 65.5 vs 67.0 exp and 68.5 prev, the employment index stood at 59.7 vs 59.8 prev., while new orders index came at 64.0 vs 63.4 prev.

US Oct construction spending MoM came at 1.4% vs 0.5% exp and 0.3% prev.

Canada's Q3 GDP QoQ came at 0.4% vs 1.1% prev (revised to 1.0%), while the  annualized reading stood at 1.7%, vs 4.5% prev (revised to 4.3%).

Canada's Sep GDP MoM came at 0.2% vs 0.1% exp and -0.1% prev.

Canada's Nov Markit Manuf PMI seasonally adjusted stood at 54.4 vs 54.3 prev.

Canada's Nov employment change came at 79.5k vs 10.0k exp and 35.3k prev.

Fed's Kaplan said there is a need to raise interest rates in the near future.

Fed's Bullard said there is a material risk of yield curve inversion in late 2018.

EU's Tusk said there is a risk of rejecting Brexit transition and trade talks Irish border offer fails. Irish PM said that the UK must put forward a 'credible' border plan to see a successful resolution of Brexit talks.

U.S. regulator approved the listing of bitcoin futures in CME, CBOE.

German SPD said a coalition with Merkel's party remains an option of many on the table. 

Nigeria and Libya may join production cut deal, helping boost the prices of Oil. 

 

Economic calendar

GMT
Event
Vol.
Actual
Consensus
Previous
Sunday, Dec 03
23:50
 
 
14.5%
Monday, Dec 04
24h
 
 
n/a
 
 
-6.1%
00:00
 
 
2.6%
00:00
 
 
0.3%
00:01
 
 
104.8
00:30
 
 
-4.5%
00:30
 
 
1.4%
04:00
 
 
0.01%
04:00
 
 
3.58%
04:00
 
 
3.07%
05:00
 
 
44.5
07:00
 
 
1.71%
07:00
 
 
17.28%
07:00
 
 
2.08%
07:00
 
 
11.9%
n/a
 
 
3.3%
08:00
 
 
56.8K
09:30
 
 
50.8
09:30
 
 
34
10:00
 
 
0.8%
10:00
 
0.3%
0.6%
10:00
 
2.6%
2.9%
13:00
 
 
464.3B
13:00
 
 
52.6
n/a
 
 
14:45
 
 
51.6
15:00
 
0.6%
1.4%
16:30
 
 
1.285%
16:30
 
 
1.435%

 

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