The financial markets are relatively steady as another week starts. Yen and Aussie trade mildly lower as recent decline extends but loss is limited so far. Asian indices are trading mildly higher with Nikkei getting some help from weakness in Yen. On the other hand, Canadian dollar is broadly firmer as WTI crude oil strengthens mildly and is holding above 46 at the time of writing. Meanwhile, gold is consolidating at around 1210, holding above 1200 handle. The markets could turn into a quiet phase in a holiday shortened week.
Released from Japan, trade surplus widened to JPY 0.47T in October versus expectation of 0.41T. Exports dropped -10.3% yoy, the 13th straight month of annual decline. Meanwhile, imports also dropped -16.5% yoy. Some economists noted that the weak trade data firstly showed the fragility of global economic recovery. Secondly, the strong appreciation of Yen from mid-2015 to mid-2016 was still having an impact of export. Nonetheless, considering the recent turn around in Yen exchange rate, there is prospect of stabilization in exports. Also from Japan, all industry activity index rose 0.2% mom in September.
The week ahead is relatively quiet with Japan on holiday on Wednesday and US on holiday on Thursday. FOMC minutes will be a major focus for affirming December rate hike expectations. US will also release housing data, durable goods and trade balance. But the key will remain on next week's non-farm payroll, which will affect expectation on Fed's rate path next year. Eurozone PMI and German Ifo will be another focus as markets are awaiting for ECB meeting in December regarding what it will do after the asset purchase program ends next March. Yen trading will look into CPI data to be released on Friday. Here are some highlights for the week ahead:
- Tuesday: Swiss trade balance; UK public sector borrowing; Eurozone consumer confidence; Canada retail sales; US existing home sales
- Wednesday: Eurozone PMIs; US durable goods orders, jobless claims, house price index, new home sales, FOMC minutes
- Thursday: Japan PMI manufacturing; German GDP final, Ifo business climate; UK BBA mortgage approvals
- Friday: Japan CPI; UK GDP revision; US trade balance