Market Brief
Gold plunged to $1,142.91 per ounce and steadied at about $1,150/52 at week open as Swiss voters rejected the Gold referendum on November 30th. EUR/CHF took a breather. Slightly higher this Monday, the upside in EUR/CHF remains limited on fears that the ECB may proceed with additional stimulus, QE, sometime soon should the inflation expectations in the EZ remain subdued. Quantitative commodities strategies are now shorting gold.
In the Forex, market the major EUR event of the week is the ECB meeting on Thursday December 4th. Released on Friday, the November inflation estimate showed no signs of improvement inn the Euro area. In contrary, the headline CPI is now expected to further retreat to 0.3% y/y. Trend and momentum indicators are marginally bullish, yet the upside attempts find little follow through as traders look to sell the rallies at 1.25+ walking into the ECB decision. The key support stands at 1.2358 (November low).
USD/JPY made a fresh high to 119.03 as BoJ Kuroda called for more corporate spending. The upside attempt was rapidly capped by determined offers above 119.00. Given the political uncertainties before December snap elections, we expect solid resistance to remain pre-120. EUR/JPY traded up to 148.06, before easing on limited enthusiasm. Additional, JPY trade ideas can be found in SQORE.
In China, the HSBC's manufacturing PMI fell to the six month low of 50. There are talks that China will introduce a system of insurance on bank deposits, in order to allow bad lenders to fail. This is a move toward a more market driven framework, where the government should insure deposits only up to 500'000 yuan per saver. The premiums applied to each bank may differ depending on their risk management said the PBoC. The bank is waiting for a feedback by end of the year. AUD/USD extended losses to 0.8417 on weak China PMI and slide in commodities. Slightly higher Australian PMI (+0.7 pt to 50.1) helped to cap the downside, yet trend and momentum indicators remain comfortably negative. Fx algorithms are pointing towards more weakness this week. Resistance is building at 0.85.
USD/CAD extended gains to 1.1459 despite Friday's better-than-expected GDP growth. The Canadian GDP grew 0.4% on month to September, pushing the year-on-year expansion to 2.3% (vs 2.2% exp. & last). The key resistance stands at year-high 1.1469, we believe it is just a matter of time before we cross over. EUR/CAD stepped in the bullish consolidation zone (MACD crossed above the zeroline), the 100-dma (1.43099) is the next resistance as EUR is subject to event risk this week. The lower Loonie is certainly not positive for Canadian inflation, already accelerating above the BoC target of 2%. The macro conditions should push the BoC to tighten its stance at this week’s BoC meeting (December 3rd) and cool-off the CAD-bears.
The greenback started the week broadly higher. The US November labor data will be closely monitored through the week. The ADP employment (Wed) is expected at 224K (vs. 230K last), the NFPs (Fri) are anticipated at 225K (vs. 214K last), the unemployment rate (Fri) is seen stable at 5.8%. Any positive surprise should revive the Fed-hawks and push the USD broadly higher, given that Fed has shifted toward a more data-dependent stance to decide the timing of the first FF rate hike.
Today, we are concentrated on November final Manufacturing PMIs from Sweden, Norway, Spain, Switzerland, Italy, France, Germany, Euro-zone, UK, US and Canada. Traders also watch Italian 3Q (F) GDP q/q & y/y, UK October Net consumer Credit, Net Lending Securities on Dwellings and Mortgage Approvals, UK October M4 Money Supply m/m & y/y, , US November ISM Manufacturing and Prices Paid, Italian November New Car Registrations.
Swissquote SQORE Trade Idea:
Commodity + Indices Daily Model: Sell OILUSD at 63.947
| Today's Calendar | Estimates | Previous | Country / GMT |
|---|---|---|---|
| SW Nov PMI Manufacturing | 52.5 | 52.1 | SEK / 07:30 |
| NO Nov Manufacturing PMI | 50.8 | 50.7 | NOK / 08:00 |
| SP Nov Markit Spain Manufacturing PMI | 52.8 | 52.6 | EUR / 08:15 |
| SZ Nov PMI Manufacturing | 53.1 | 55.3 | CHF / 08:30 |
| SW Sep Wages Non-Manual Workers YoY | - | 2.60% | SEK / 08:30 |
| IT Nov Markit/ADACI Italy Manufacturing PMI | 49.4 | 49 | EUR / 08:45 |
| FR Nov F Markit France Manufacturing PMI | 47.6 | 47.6 | EUR / 08:50 |
| GE Nov F Markit/BME Germany Manufacturing PMI | 50 | 50 | EUR / 08:55 |
| NO Oct Credit Indicator Growth YoY | 5.30% | 5.30% | NOK / 09:00 |
| IT 3Q F GDP WDA QoQ | -0.10% | -0.10% | EUR / 09:00 |
| EC Nov F Markit Eurozone Manufacturing PMI | 50.4 | 50.4 | EUR / 09:00 |
| IT 3Q F GDP WDA YoY | -0.40% | -0.40% | EUR / 09:00 |
| UK Oct Net Consumer Credit | 1.0B | 0.9B | GBP / 09:30 |
| UK Oct Net Lending Sec. on Dwellings | 1.8B | 1.8B | GBP / 09:30 |
| UK Oct Mortgage Approvals | 59.0K | 61.3K | GBP / 09:30 |
| UK Oct Money Supply M4 MoM | - | -0.70% | GBP / 09:30 |
| UK Oct M4 Money Supply YoY | - | -2.50% | GBP / 09:30 |
| UK Oct M4 Ex IOFCs 3M Annualised | 3.70% | 3.50% | GBP / 09:30 |
| UK Nov Markit UK PMI Manufacturing SA | 53 | 53.2 | GBP / 09:30 |
| DE Nov Danish PMI Survey | - | 51.7 | DKK / 10:00 |
| CA Nov RBC Canadian Manufacturing PMI | - | 55.3 | CAD / 14:30 |
| US Nov F Markit US Manufacturing PMI | 55 | 54.7 | USD / 14:45 |
| CA 28.nov. Bloomberg Nanos Confidence | - | 57.4 | CAD / 15:00 |
| US Nov ISM Manufacturing | 58 | 59 | USD / 15:00 |
| US Nov ISM Prices Paid | 52.5 | 53.5 | USD / 15:00 |
Currency Tech
EUR/USD
R 2: 1.2578
R 1: 1.2505
CURRENT: 1.2460
S 1: 1.2402
S 2: 1.2358
GBP/USD
R 2: 1.5835
R 1: 1.5737
CURRENT: 1.5711
S 1: 1.5593
S 2: 1.5575
USD/JPY
R 2: 120.00
R 1: 118.98
CURRENT: 117.73
S 1: 117.36
S 2: 115.46
USD/CHF
R 2: 0.9839
R 1: 0.9751
CURRENT: 0.9643
S 1: 0.9606
S 2: 0.9531