The Japanese is trying to recover as poor GDP data knocks down Nikkei. Q3 GDP unexpectedly contracted -0.4% qoq versus expectation of 0.5% qoq growth. That means, Japan slide back into technical recession with a deeper -1.8% qoq contract back in Q2. GDP price index rose 2.1% yoy versus expectation of 1.9% yoy. Nikkei is down more than -2% at the time of writing and is having 17000 handle in sight.. An economic adviser of prime minister Shinzo Abe noted that the slide in the economy was "shocking" and it's not a situation to debate another sales tax hike any more. He noted it should be time to focus on how to support the economy. Today's GDP data would solidify the case for Abe to postpone the next planned sales tax hike in October 2015. Abe might hold a press conference this week to announce the decision, which might come with a early election to secure the support for this decision.
New Zealand dollar, surges on better than expected retail sales, which showed 1.5% qoq growth in Q3 versus consensus of 0.8% qoq. New Zealand finance minister Bill English said that NZD/USD at mid-to-high 70s is sustainable for the economy. He noted that recent depreciation in the currency had "quite a positive impact" on exporters' productivity and competitiveness. And that would promote a more profitable export sector and a more diverse one. Meanwhile, he also noted that the country could have 3% growth for the next three or four years. NZD/USD rises to as high as 0.7974 so far today. Strong support was seen around 0.7682 (2013 low). We'd likely seen further rebound in the pair for 0.8034 and above.
Elsewhere, UK Rightmove house price dropped -1.7% mom in November. Eurozone will release trade balance today. Canada will release international securities transactions. US will release empire state manufacturing index and industrial production. Looking ahead, BoJ will meet this week and is unlikely to announce anything new. RBA, BoE and FOMC will release meeting minutes. Main focus will be on BoE and FOMC minutes for hints of the timing on rate hikes. Here are some highlights for the week.
- Tuesday: RBA minutes; UK CPI; Eurozone ZEW; US PPI, NAHB housing
- Wednesday: BoJ policy decision; BoE minutes; Swiss ZEW; US housing starts and building permits, FOMC minutes
- Thursday: New Zealand PPI; China HSBC PMI manufacturing; Swiss trade balance; Eurozone PMIs; UK retail sales; Canada wholesales; US CPI, jobless claims, Philly Fed survey, existing home sales
- Friday: UK public sector net borrowing; Canada CPI