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Key Overnight Developments
- Aussie Dollar Unmoved as RBA Leaves Rates on Hold
- UK Retail Sales Growth Slowed in November, Says BRC
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.3261 | 1.3395 |
GBPUSD | 1.5682 | 1.5824 |
The Euro and the British Pound tracked modestly higher in overnight trade, adding 0.1 and 0.2 against the US Dollar as the greenback faced broad-based selling pressure amid uptick in risk appetite across Asian stock exchanges after Australia signaled an indefinite pause in its rate hike campaign (see below).
Asia Session Highlights
CCY | GMT | EVENT | ACT | EXP | PREV |
AUD | 22:30 | AiG Performance of Construction Index (NOV) | 42.2 | - | 44.0 |
NZD | 23:00 | QV House Prices (YoY) (NOV) | 0.3% | - | 1.1% |
JPY | 23:50 | Official Reserve Assets (NOV) | $1101.0B | - | $1118.1B |
GBP | 0:01 | BRC Retail Sales Monitor (NOV) | 0.7% | - | 0.8% |
CNY | 0:01 | China Manpower Survey (1Q) | 38% | - | 51% |
AUD | 0:01 | Australia Manpower Survey (DEC) | 21% | - | 20% |
NZD | 0:01 | New Zealand Manpower Survey (1Q) | 16% | - | 15% |
JPY | 1:00 | Japan Manpower Survey (1Q) | 7% | - | 6% |
AUD | 3:30 | Reserve Bank of Australia Rate Decision (DEC) | 4.75% | 4.75% | 4.75% |
JPY | 5:00 | Coincident Index (OCT P) | 100.7 | 100.8 | 102.1 |
JPY | 5:00 | Leading Index (OCT P) | 97.2 | 97.3 | 98.6 |
The Reserve Bank of Australia kept interest rates on hold at 4.75 percent as widely expected, with RBA Governor Glenn Stevens reinforcing a neutral outlook for policy going forward, saying the central bank views the current setting of monetary policy as “a little above average” and “appropriate for the economic outlook”, mirroring the dovish language he used in parliamentary testimony in late November. The outcome did not prove significantly market-moving for the Australian Dollar, with traders getting next to no new information out of the outcome.
UK Retail Sales growth slowed in November, with receipts adding 0.7 percent from the previous year according to a report from the British Retail Consortium. BRC Director General Stephen Robertson repeated familiar warnings about customers cutting back amid lingering worries about employment and household finances, adding that “if there is good news, it’s that the [government’s proposed spendingcuts] have not made things worse.”
Euro Session: What to Expect
CCY | GMT | EVENT | EXP | PREV | IMPACT |
GBP | - | NIESR Gross Domestic Product Estimate (NOV) | - | 0.5% | Low |
CHF | 6:45 | Unemployment Rate (NOV) | 3.6% | 3.5% | Medium |
CHF | 6:45 | Unemployment Rate s.a. (NOV) | 3.6% | 3.6% | Medium |
GBP | 9:30 | Industrial Production (MoM) (OCT) | 0.3% | 0.4% | Medium |
GBP | 9:30 | Industrial Production (YoY) (OCT) | 3.9% | 3.8% | Medium |
GBP | 9:30 | Manufacturing Production (MoM) (OCT) | 0.3% | 0.1% | Low |
GBP | 9:30 | Manufacturing Production (YoY) (OCT) | 5.4% | 4.8% | Low |
EUR | 11:00 | German Factory Orders n.s.a. (YoY) (OCT) | 18.6% | 14.0% | Low |
EUR | 11:00 | German Factory Orders s.a. (MoM) (OCT) | 1.9% | -4.0% | Medium |
Economic data is likely to play second fiddle to risk sentiment in European hours, with traders looking past a set of second-tier releases to focus on the outcome of Ireland’s 2011 budget voteas well as the rhetoric emanating out of Brussels as European Union finance ministers debate an expansion of theEuropean Financial Stability Fund (EFSF).
In Ireland, the ruling Fianna Fáil party lost a key by-election in late November, narrowing its majority in parliament to a meager two MPs, both of whom are independents. Should they withdraw their support and the budget vote fails, the agreements on securing EU/IMF aid reached over recent weeks will prove essentially moot, an outcome that is likely to weigh heavily on the Euro and risk-sensitive currencies at large.
Meanwhile in Brussels, Belgian PM Didier Reynders has broken ranks with France and Germany to suggest that the EFSF ought to be expanded, adding that officials will also discuss the outlook forPortugal. While markets may have rewarded the Euro if Reynders’ attempt to be proactive were met with broad-based support, his attempt at taking the initiative seems to have done quite the opposite, highlighting ideological divisions within the regional bloc and shifting the spotlight from what is still likely to be a successful budget vote in Ireland to the next probable victim of the sovereign debt crisis. On balance, this may prove to undermine the single currency, muting near-term optimism even if Dublin should keep its house in order.
Scanning the docket, Switzerland’s Unemployment Rate is expected to tick higher to 3.6 percent in November, marking the first increase in 10 months. Meanwhile, UK Industrial Production growth is expected to accelerate, with output adding 3.9 percent in October, while German Factory Orders add 1.9 percent having plunged 4 percent in the previous month.
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