Asia Recap
NIKKEI
15,341.82
-173.24
-1.12%
HANG SENG
23,218.12
-120.12
-0.51%
S&P/ASX 200
5,062.52
-41.73
-0.82%
News Events
Actual
Forecast
AUD MI Inflation Expectations
2.1%
AUD Employment Change
21.0K
10.3K
AUD Unemployment Rate
5.8%
5.8%
Headlines
Loomis Sayles’s Fuss Says Kiwi No. 1, Likes Commodity Currencies — Bloomberg — Loomis Sayles & Co.’s Dan Fuss, whose flagship fund beat 97 percent of rivals over the past three years, sees four commodity currencies as the “most attractive,” even as prospects the Federal Reserve will pare stimulus drive analysts to forecast most of them will decline. His top pick is the New Zealand dollar, followed by the Australian and Canadian currencies and then the Mexican peso. While all are associated with wealth from resources exports, from oil to iron ore to agriculture, Fuss is focusing on something else. “Look at countries from a longer-term viewpoint and ask yourself: What is their Treasury borrowing environment going to be?” the 80-year-old fund manager said in an interview today in Tokyo. “In other words, how much money does the national government have to raise, number one. And then number two, how likely are they to raise it domestically. If you can get that right, then you’re going to do well on a longer-term basis.”
RBNZ Signals 2014 Rate Increases as Inflation Accelerates — Bloomberg — New Zealand’s central bank stepped up its inflation-fighting rhetoric and signaled it will start raising interest rates in the first half of next year as the economy strengthens. The currency rose. “The bank will increase the official cash rate as needed in order to keep future average inflation near the 2 percent target midpoint,” Reserve Bank of New Zealand Governor Graeme Wheeler said in statement in Wellington today after leaving the benchmark at a record-low 2.5 percent. In October, he said increases “will likely be required” in 2014.
Aussie Falls Second Day as Joblessness Rises — Bloomberg — Australia’s dollar declined for a second day after a domestic report showed the unemployment rate climbed to match the highest level since 2009 and ahead of U.S. data forecast to show consumer spending accelerated. The Aussie is near levels it was trading at 30 years ago when exchange controls were lifted, prompting calls for the currency to weaken to stimulate growth. New Zealand’s kiwi touched a five-year high against Australia’s dollar after the smaller country’s central bank said rate increases may be needed as inflation pressures build. The key rate will probably need to rise 225 basis points over the next 2 1/4 years, Reserve Bank of New Zealand Governor Graeme Wheeler said today.
Europe Recap
STOXX 50
2,939.70
-7.61
-0.26%
FTSE 100
6,483.55
-24.17
-0.37%
DAX
9,037.36
-39.75
-0.44%
News Events
Actual
Forecast
CHF Libor Rate
<0.25%
<0.25%
Headlines
Euro Rises Against Yen Before Industrial Output; Kiwi Advances — Bloomberg — The euro rose for the first time in three days versus the yen before a report that economists said will show euro-area industrial production rebounded, supporting the central bank’s decision this month not to add stimulus. The shared currency was 0.2 percent from a six-week high versus the dollar as European Central Bank President Mario Draghi addressed the European Union parliament in Strasbourg. The dollar rose against the yen as investors weigh U.S. economic reports before next week’s Federal Reserve meeting. Australia’s dollar fell after unemployment rose to match the highest level since 2009. New Zealand’s currency climbed as the central bank said rate increases may be needed.
Fischer Seen Bringing Crisis-Fighting Skills to No. 2 Fed Post — Bloomberg — Stanley Fischer, said to be the leading candidate for the No. 2 job at the Federal Reserve, offers crisis-fighting experience and a dose of skepticism about efforts to shape expectations on the outlook for interest rates. The former Bank of Israel governor, though a newcomer to the Fed, also brings continuity and strong academic credentials: as a professor of economics at Massachusetts Institute of Technology, he taught Fed Chairman Ben S. Bernanke, whose term ends in January, and European Central Bank chief Mario Draghi.
Pound Snaps Decline Before Osborne Autumn Statement Testimony — Bloomberg — The pound snapped its biggest decline in two weeks versus the dollar before Chancellor of the Exchequer George Osborne goes before lawmakers to explain his year-end budget statement delivered last week. Sterling was little changed against the euro before a report tomorrow economists said will show U.K. construction output increased in October. Osborne said the British economy will expand 1.4 percent in 2013, up from the 0.6 percent predicted in March, the first upgrade since 2010, in his Autumn Statement on Dec. 5. The Debt Management Office is scheduled to sell 4.5 billion pounds ($7.37 billion) of government bonds due in 2019 today.
Draghi Builds Stress-Test Credibility in ECB Bank Review — Bloomberg — The European Central Bank is showing that it can repair the reputation of stress tests. More than 90 percent of economists surveyed by Bloomberg News said that stress tests next year, in the final part of an ECB-led review of the euro area’s most prominent banks, will be more credible than previous exercises by the London-based European Banking Authority. Details of the examinations of about 130 lenders from Banco Santander SA to ABN Amro Bank NV are due to be released at the end of January.
Canadian Dollar Gains a Sixth Day as Crude-Oil Discount Narrows — Bloomberg — The Canadian dollar rose for a sixth day as the discount the country faces on its biggest export, crude oil, reached its narrowest level in almost three months. The currency gained against most of its 16 major peers after U.S. congressional negotiators reached a budget agreement that will limit spending cuts and reduce the deficit. Canada’s currency weakened beyond C$1.07 per U.S. dollar last week for the first time in three years on speculation the Federal Reserve may let borrowing costs rise by tapering bond-buying even as the the Bank of Canada keeps interest rates low amid inflation below its target band.
Today’s Session Highlights
Mostly a North American affair today. Focus is around EUR, CAD and USD this morning, and NZD late-afternoon. All news releases as per the table below.
Forecast
Previous
4:00am
EUR
ECB Monthly Bulletin
5:00am
EUR
Industrial Production m/m
0.4%
-0.5%
8:30am
CAD
NHPI m/m
0.2%
0.0%
USD
Core Retail Sales m/m
0.2%
0.2%
USD
Retail Sales m/m
0.6%
0.4%
USD
Unemployment Claims
321K
298K
USD
Import Prices m/m
-0.7%
-0.7%
10:00am
USD
Business Inventories m/m
0.4%
0.6%
1:05pm
CAD
BOC Gov Poloz Speaks
4:30pm
NZD
Business NZ Manufacturing Index
55.7