The currency markets have been mixed on Tuesday, with the Yen in focus after the BOJ said yesterday that it would be tweaking its purchases of JGBs and cutting the amount that it will be buying in future. It has been a choppy ride for the Yen since then, but at the end of the session the dollar does remain under some pressure as Yen demand is still apparent. Elsewhere though, the dollar has been in demand, particularly against the EU majors, with the Euro looking heavy despite some more decent EU data. Today saw the EU unemployment rate fall to 8.7% in November, down from 8.8%, meeting expectations, to be at the lowest level in nearly 9 years since 2009. Also released from Europe, the German industrial production rose 3.4% mm in November while the German trade surplus widened to EUR 22.3 bio. The commodity currencies are mixed as speculation for a January rate hike from the Bank of Canada continue to grow although the Aud$ saw an early slide in Europe. Note that US yields moved higher today (10 year; 2.55%), further underpinning the dollar. In other markets, stocks continue to climb ever-higher, while the metals are a little lower on the back of the stronger dollar. Oil is at a 3 year high, underpinned by OPEC-led production cuts, expectations of stronger demand and speculation that that U.S. crude inventories have dropped for an eighth week.
Asia will kick off with the Australian NAB Business Conditions/Confidence (Dec) and the China CPI (exp 0.4% mm, 1.9% yy) and PPI (exp 4.8%yy). The main event in Europe will be the UK NIESR GDP Estimate and Manufacturing/Industrial Production and Trade Balance for November, while the US will look to the Import/Export Index for guidance, along with speeches from the Fed’s Evans and Bullard. The EIA Crude Oil Stocks Weekly Change will be released late in the day.
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