Data-heavy day

Market Brief

Trading in the Asian session was subdued, weighed down by the shifting outlook for oil prices. The Nikkei fell -0.4%, the Hang Seng followed -0.2%, yet the Shanghai rose 0.3%. With a data-heavy day ahead, intraday volatility should increase significantly. Also, with the OPEC meeting just 24 hrs away, we should expect oil-linked assets to remain unstable. The expectation of a meaningful cut in production seems less likely as member demands diverge considerably. However, given the hype that OPEC created which drove oil prices 8% higher, we might see some weak-worded statement on cooperation to save face.

In Japan, the unemployment rate remained unchanged at 3.0% in October. The improvement in the labor markets seems to point to a changed demographic which is creating shortage, rather than an actual acceleration of economic data. In Japan, October household spending came in at -1.0% m/m against 0.1% expected. Japanese retail sales came in at -0.1% y/y against -1.2% expected. USDJPY held steady between 111.60 to 112.25. China commodity futures fell, sending AUDUSD down to 0.7459. NZDUSD shifted into a sideways consolidation pattern with all eyes on RBNZ tonight. In addition, the RBNZ will release their bi-annual financial stability report, followed by comments from RBNZ Governor Wheeler.

In Europe, the French GDP q/q Q3 preliminary estimate is unlikely to be revised, however, a slight uptick in data could suggest risks to the upside. EUR/USD was slightly higher bid, climbing to 1.0622 large 1.6bn 1.0620-40 strike option held the market in check. Swiss payroll reports should stay unchanged at 4.9% as recent economic data has firmed.

In the US, Q3 GDP growth to be revised slightly to 3.0% q/q, from 2.9% in the preliminary estimate. With consumer spending and confidence solid, growth will continue to expand at a modest pace. The US economy should continue to grow, yet the path has become a bit uncertain given the Trump fiscal proposal which could accelerate US growth 0.3 to 0.4% in 2017. Also, NY Fed President Dudley will be speaking on economic growth in Puerto Rico, with no expectations for comments regarding current US monetary policy. Finally, consumer confidence is expected to rise to 100.00 after the marginal decline in October to 98.6. Solid consumer confidence should support GDP growth. We remain bearish USD in the mid-term as we suspect Trump reflation fiscal play is already priced in. The risk is non execution.

In Japan, the unemployment rate remained unchanged at 3.0% in October. The improvement in the labor markets seems to point to a changed demographic which is creating shortage, rather than an actual acceleration of economic data. In Japan, October household spending came in at -1.0% m/m against 0.1% expected. Japanese retail sales came in at -0.1% y/y against -1.2% expected. USD/JPY held steady between 111.60 to 112.25. China commodity futures fell, sending AUD/USD down to 0.7459. NZDUSD shifted into a sideways consolidation pattern with all eyes on RBNZ tonight. In addition, the RBNZ will release their bi-annual financial stability report, followed by comments from RBNZ Governor Wheeler.

In Europe, the French GDP q/q Q3 preliminary estimate is unlikely to be revised, however, a slight uptick in data could suggest risks to the upside. EURUSD was slightly higher bid, climbing to 1.0622 large 1.6bn 1.0620-40 strike option held the market in check. Swiss payroll reports should stay unchanged at 4.9% as recent economic data has firmed.

In the US, Q3 GDP growth to be revised slightly to 3.0% q/q, from 2.9% in the preliminary estimate. With consumer spending and confidence solid, growth will continue to expand at a modest pace. The US economy should continue to grow, yet the path has become a bit uncertain given the Trump fiscal proposal which could accelerate US growth 0.3 to 0.4% in 2017. Also, NY Fed President Dudley will be speaking on economic growth in Puerto Rico, with no expectations for comments regarding current US monetary policy. Finally, consumer confidence is expected to rise to 100.00 after the marginal decline in October to 98.6. Solid consumer confidence should support GDP growth. We remain bearish USD in the mid-term as we suspect Trump reflation fiscal play is already priced in. The risk is non execution.

Currency Tech

EURUSD
R 2: 1.1259
R 1: 1.0954
CURRENT: 1.0585
S 1: 1.0518
S 2: 1.0458

GBPUSD
R 2: 1.2857
R 1: 1.2674
CURRENT: 1.2417
S 1: 1.2302
S 2: 1.2083

USDJPY
R 2: 121.69
R 1: 114.87
CURRENT: 112.95
S 1: 106.14
S 2: 104.97

USDCHF
R 2: 1.0328
R 1: 1.0257
CURRENT: 1.0154
S 1: 0.9632
S 2: 0.9537

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot