Macro Events & News for December 10, 2015

10 December, 2015

Macro Events & News for December 10, 2015

FX News Today

Reserve Bank of New Zealand cut rates to 2.50% from 2.75%. The rate cut was widely anticipated. The reduction in the official cash rate as “monetary policy need to be accommodative to help ensure that future average inflation settles near the middle of the target range,” Governor Wheeler said. He expects this can be accomplished at the current rate setting, but assured the bank will reduce rates further if needed. On the exchange rate, he said the recent rise in the value of the New Zealand dollar has been “unhelpful and further depreciation would be appropriate in order to support sustainable growth.”

Japan’s PPI improved to a 3.6% y/y rate of decline in November from -3.8% in October. Granted, that is still troublesome for the Bank of Japan’s efforts to reflate the economy, but at least the rate of decline did not worsen. The PPI fell 0.1% m/m in November after the 0.6% plunge in November.

Australia employment surged 71.4k in November after the revised 56.1k gain in October (was +58.6k). The hefty gain in November, which was the largest one month gain since July of 2000, contrasted with expectations for a modest dip following the sizable rise in October. Full time jobs grew 41.6k in November after the 38.4k rise in October (was +40.0k). Part time jobs rose 29.7k after a 17.7k gain (was +18.6k). The unemployment rate fell to 5.8% in November from 5.9% while the participation rate rose to 65.3% in November from 65.0%. Two consecutive months of stellar job growth confirms that the RBA’s stimulus efforts are working. Moreover, it trims prospects for further cuts from the RBA next year. We see no change for an extended period. AUD-USD shot higher to the 0.7300 area from 0.7250 ahead of the report.

 

Main Macro Events Today

SNB Rate Decision: The SNB was in luck and Draghi didn’t quite deliver the bazooka markets had been hoping for, which meant market reaction didn’t go quite according to plan and this gives the SNB some time to watch how things develop. That doesn’t mean, there couldn’t be further easing outside a policy setting meeting if there is fresh upward pressure on the currency. 

BoE Rate Decision: No change is expected in the Bank of England’s 0.5% rate policy.

Canada Capacity Utilization: We expect the capacity use rate, due Thursday, to recover to 82.0% in Q3 (median 82.1%) from 81.3% in Q2. The anticipated improvement tracks the 2.3% rebound in Q3 GDP after the 0.3% drop in Q2 and the 0.7% pull-back in Q1.

US Initial Jobless Claims: Initial claims data for the week of December 5 are out today and should show claims at 268k (median 267k) for the week, down from 269k in the week prior but above the 260k reading before that. Despite improvements in claims data we tend to see increased volatility around the holiday season which accounts for some of the increase in the November average to 269k. We expect a December average of 266k which compares to our forecast for nonfarm payrolls of 190k for the month.


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The global stock rally continued in Asia overnight

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Too-strong a dollar may hurt the economy

Japanese stock markets moved higher, led by Japanese bourses as the country managed to snap a 14-month long run of falling exports, which helped the Nikkei to close with a 1.4% gain...


Dollar found its feet after declining over the last day

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The dollar has settled moderately lower

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Stock markets continued to stabilise

German HICP confirmed at 1.7% y/y, as expected, with prices up 1.0% m/m. The sharp acceleration from just 0.7% y/y in November was mainly due to base effects from lower energy prices and the breakdown showed that prices for heating oil jumped 21.9% y/y in December...


ECB policy was focused on avoiding deflation trap

Asian stock markets were mixed, with Japan and ASX heading south amid reports that U.K. Prime Minister May will announce plans for a hard Brexit at today’s keynote speech. Yen strength is also continuing to put pressure on the Japanese markets...

U.S. markets are closed Monday

U.S. markets are closed Monday for Martin Luther King Day. This will be a busy week for traders, with the inauguration of president-elect Trump on Friday headlining...

The dollar is trading softer into the London open

Aftershocks from President-elect Trump’s campaign-like press conference, which had weighed on global stock markets and yields started to recede late in the U.S. session and U.S. equities managed to recover part of their losses...

  


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