CANADA TO PUBLISH FISCAL UPDATE ON DEC. 16

MNI BRIEF: Inflation Expectations Tick Higher - NY Fed

MNI BRIEF: China Passenger Car Sales Up In November Y/Y

MNI BRIEF: Mexico Inflation Down To 4.55% In November

MNI China Daily Summary: Monday, December 9

MNI BRIEF: China To Strengthen Policy Easing In 2025: Poliburo

EZ/UK Bond Supply Calendar: Austria, UK Auction on Tuesday

EZ/UK T-Bill Calendar: Spain, Belgium Auction on Tuesday

MNI:US OCT WHOLESALE INV 0.2%; SALES -0.1%

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

MNI EUROPEAN ANALYSIS: Commodity FX Outperforms Safe Havens

  • Today's session has been dominated by a further improvement in China related asset sentiment. A further reduction in Covid restrictions across a number of major cities over the weekend continues to buoy sentiment. USD/CNH is back below 7.00 and eyeing mid-September lows, while onshore equities are +1.5% higher.
  • Commodities are generally higher as well, particularly sensitive plays to China, like iron ore and copper. The has benefited commodity FX, particularly the AUD. The USD more broadly remains on the backfoot, although safe havens have lagged today, particularly the yen. US yields are higher (+4/+5bps) across the curve in the Asia Pac session.
  • Looking ahead, French, German, UK and Eurozone PMI will cross in London hours. Meanwhile NY hours will see US data releases including PMI, Factory Orders, Durable good orders and ISM Services Index. The Fed is now in its policy blackout period. Russian reaction to the oil price cap will also be in focus.

MARKETS

US TSYS: Moderately Cheaper In Asian Trade

MNI (Sydney) - TYH3 deals at 114-13+, just off the base of its narrow 0-06+ range, on a volume of ~70k. Cash tsys run 3-5bps cheaper across the curve with the belly leading the weakness.

  • Cash tsys opened trading 3-5bps cheaper across the major cash benchmarks as local participants reacted to Friday's US employment data and the reopening news from China over the weekend.
  • Tsys space looked through a rally in Hong Kong equities and a softer than expected Caixin PMI print in China allowing the early cheapening to persist.
  • Looking ahead Italian, French, German, UK and Eurozone PMI will cross in London hours. Meanwhile NY hours will see US data releases including PMI, Factory Orders, Durable Good Orders and ISM Services Index. The Fed is now in its policy blackout period.

EQUITIES: China Re-Opening Theme Dominates, Mixed Trends Elsewhere

MNI (Sydney) - China/HK equities continue to rally, after a number of China cities eased covid-related curbs further over the weekend. This is keeping enthusiasm for the re-opening trade firm. However, elsewhere sentiment is more mixed in the region, while US futures sit modestly lower for the session (-0.15%/-0.20%).

  • The HSI is up a further 3.50% so far, while the tech sub index is up a further 6.60%. This follows a strong gain from the Golden Dragon Index in US trading on Friday. Gaming stocks in Macau have also done well, while property related plays are higher to.
  • The beta of mainland stocks remains lower, but the CSI 300 is still up 1.73%, while the composite index has gained 1.56%. The property sub-index is outperforming, +2.55% at this stage.
  • Elsewhere tech sensitive markets like the Kospi are lower, -0.15/0.20%, while the Taiex is modestly positive at this stage. The Nikkei 225 is around flat at the time of writing.
  • The ASX 200 is outperforming, up 0.50% at this stage, led by resource related names, as we see further gains in commodity prices, led by optimism around the China growth outlook.

OIL: Prices Higher On China Hopes, Steady OPEC+ Output, More Sanctions On Russia

MNI (Australia) - Oil prices have risen today by around 1% after falling during NY trading on Friday. WTI is now over the $80 mark at around $80.80/bbl after reaching a high of $81.84 earlier and Brent is about $86.50 after a high of $87.60. Better global growth sentiment driven by moves from China towards reopening has put downward pressure on the USD (-0.4%) and boosted commodities.

  • WTI oil prices are now just above the 10-day simple MA. Bearish activity would resume at $73.60. Key resistance is at $89.35, 50-day EMA, and a clear break would change the trend.
  • OPEC+ confirmed its previously announced output cut of 2mbd at its meeting on the weekend but didn’t increase it as markets had feared earlier last week.
  • The G7 oil price cap of $60/bbl on Russian crude comes into effect today, as well as an EU ban on most imports by sea. The impact of these measures on global supply is uncertain. Russia has said it won’t sell to the countries that have signed up for the cap plus there are large consumers such as China and India that are likely to continue buying Russian oil.
  • Tonight the November PMIs in Europe and the US are released and the US ISM services index prints.

GOLD: Gold Prices Move Higher As USD Weakens On Better Global Outlook

MNI (Australia) - Gold prices have rallied today to $1808.60, up 0.6% from Friday’s NY close. It reached an intraday high of $1808.77 in recent trading, the highest since early July. Gold has bounced on the weaker USD (-0.4%), which has trended down on news of China easing some Covid-related restrictions.

  • Gold broke through the bull trigger of $1786.50 last Thursday, confirming the recommencement of the upward trend. Today it broke through resistance at $1807.90, the August 10 high. Key trend support is at $1729, the November 23 low.
  • Bullion fell on the robust US labour market report on Friday but did recover some of its losses by the close.
  • Tonight the November PMIs in Europe and the US are released and the US ISM services index prints.

FOREX: USD Starts The Week On The Back Foot

MNI (Australia) The USD starts the week on the backfoot, despite a firmer US Tsy yield back drop. The BBDXY is back sub 1252.00, -0.40% for the session. Majors have taken their cue from USD/CNH moves, which is more than 1% below NY closing levels, on further lowered Covid restrictions announced over the weekend. This has buoyed commodities, while equities paint a more mixed picture.

  • USD/JPY has been the exception in terms of USD weakness. This pair currently sits around 134.30/35, little changed for the session. We are off earlier highs but have seen little follow through to the downside. Japan data and BoJ talk did little to shift the needle.
  • The A$ has performed strongly, up 0.75% to 0.6840/45. The better commodity price backdrop, particularly for copper and iron ore, has helped drive the outperformance trend. Weaker Q3 company profits data was largely ignored by the market. We do get the RBA meeting tomorrow, where slightly less than 25bps is priced in for the outcome.
  • NZD/USD recovered from earlier losses, also ignoring generally poorer data. The pair is back to 0.6440, +0.60% for the session. The pair is now eyeing mid-August highs close to 0.6470.
  • EUR and GBP are both around 0.50% firmer against the USD, while NOK has slightly outperformed, up 0.60% to 9.7200, with higher oil prices helping.
  • Looking ahead Italian, French, German, UK and Eurozone PMI will cross in London hours. Meanwhile NY hours will see US data releases including PMI, Factory Orders, Durable Good Orders and ISM Services Index. The Fed is now in its policy blackout period.

ASIA FX: USD/CNH Eyeing Mid-September Lows

MNI (Australia) A further lowering in Covid restrictions in a number of major China cities over the weekend has spurned a further sharp rally in the China currency. This has benefited most, but not all, Asian FX. Higher US Cash Tsy yields have likely helped curbed gains in the high yielders. Tomorrow, the focus will be on Philippines and Taiwan CPI prints.

  • USD/CNH started the session lower and hasn't looked back. The pair is back below 7.00, touching a low of 6.9373, before stabilizing close to 6.9500. China equities continue to rally, which has helped offset the weaker Caixin services PMI print. The low 6.9100 region is the next downside target.
  • 1 month USD/KRW got to a fresh low of 1288.90, but is now back above the 1290 level. Onshore equities are lower, but the lower USD/CNH levels have offset. Korean FX reserves rose in November (back to $416bn) in large part due to valuation effects.
  • USD/INR is slightly higher, last tracking around the 81.50/55 region. Higher oil prices are likely weighing at the margin, although onshore equities are lower as well (-0.30% at this stage). Higher US yields aren't helping either. The pair is very much within recent ranges, watch for intervention risk ahead of the 81.90 level (also coincides with the simply 50-day MA). The services PMI came in firmer, suggesting a resilient growth backdrop. The RBI announces the policy decision this Wednesday (+35bps expected).
  • USD/IDR spot is still finding support around the 15400 level. We got to a low of 15385, but now sit back at 15410, still down on NY closing levels, but only by 0.10%.

AUSTRALIA: MI Inflation Gauge Points To Pickup In November CPI

The Melbourne Institute’s measure of inflation rose a robust 1% m/m in November after 0.4% last month. This brought the annual rate to 5.9% from 5.2%, its highest since the series began in 2003.

  • The MI inflation measure has been tracking below the ABS’ monthly CPI data since the end of 2021 but the two series have a 96% correlation. This suggests that the November rise in MI inflation may signal a pickup in the headline CPI after it moderated in October.
  • A possible pickup in inflation in November is not surprising given that 38% of the basket was assumed to be flat in the October monthly CPI reading. RBA Deputy Governor Bullock also noted that it is going to take time to “figure out what is the noise” in the new monthly CPI series.

AUSTRALIA: Energy Cost Relief Unlikely To Be Felt Until Mid-2023

The federal government has said that it will announce its plans to provide relief to small businesses and households from its projected +50% rise in power prices before Christmas. The Australian believes that it will be announced by this weekend but that the impact won’t be felt until the middle of 2023 and then it will just reduce the increase expected for FY 2023-24, according to the Grattan Institute.

  • There has been speculation that it will involve a coal price cap, regulations contained in a new code of conduct for gas producers and other regulations for the energy sector. There has been a lot of disagreement in how to provide energy price relief.
  • Key meetings this week include pre-National Cabinet on Tuesday followed by National Cabinet on Wednesday, an energy ministers’ meeting and federal cabinet meeting on Friday.
    - The Australian

AUSTRALIA: Newspoll Shows Strong Support For PM Albanese

The final Newspoll survey for the year published by The Australian shows that PM Albanese’s support is at its highest since he became PM after a week where his industrial relations changes and anti-corruption organisation were passed through parliament.

  • The primary vote for the governing Labor Party rose 1pp to 39% and is more than 6pp higher than its May election result of 32.6%. The opposition Coalition’s primary vote was unchanged at 35% after 35.7% at the election but 4pp higher than the September survey.
  • Newspoll’s two-party-preferred result was unchanged at 55-45% in favour of the government.
  • The Greens showed an unchanged primary vote of 11% and on the right One Nation with 6%. Other small parties, including independents, fell further to 8% to be at their lowest since the election.
  • PM Albanese saw a 5pp increase to 59% as the preferred PM whereas Opposition leader Dutton fell 3pp to 24%.
    - The Australian



UP TODAY (Times GMT/Local)

DateGMT/LocalImpactFlagCountryEvent
05/12/20222200/0900*AU IHS Markit Final Australia Services PMI
05/12/20220030/0930**JP IHS Markit Final Japan Services PMI
05/12/20220145/0945**CN IHS Markit Final China Services PMI
05/12/20220145/0245EU ECB Lagarde at Central Bank Governors IMF Seminar
05/12/20220700/0200*TR Turkey CPI
05/12/20220815/0915**ES IHS Markit Services PMI (f)
05/12/20220845/0945**IT IHS Markit Services PMI (f)
05/12/20220850/0950**FR IHS Markit Services PMI (f)
05/12/20220855/0955**DE IHS Markit Services PMI (f)
05/12/20220900/1000**EU IHS Markit Services PMI (f)
05/12/20220930/1030*EU Sentix Economic Index
05/12/20220930/0930**UK IHS Markit/CIPS Services PMI (Final)
05/12/20221000/1100**EU retail sales
05/12/2022-EU ECB Panetta at Eurogroup Meeting
05/12/20221330/0830*CA Building Permits
05/12/20221445/0945***US IHS Markit Services Index (final)
05/12/20221500/1000***US ISM Non-Manufacturing Index
05/12/20221500/1000**US factory new orders
05/12/20221630/1130*US US Treasury Auction Result for 26 Week Bill
05/12/20221630/1130*US US Treasury Auction Result for 13 Week Bill

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.