The US$ was generally firmer on Friday following the release of the stronger than expected PPI figure, reaffirming the Fed’s stated monetary tightening stance and setting up conditions for a fourth interest rate hike this year, in December – and then another 3-4 next year. Headline PPI rose 0.6% mm, 2.9% yy in October, above expectation of 0.2% mm, 2.7% yy. PPI core rose 0.5% mm, 2.6% yy, above expectation of 0.2% mm, 2.5% yy. Elsewhere in the FX space, Sterling performed poorly, now back below 1.3000, not helped by more Brexit problems on the Irish border and the resignation from the UK Government of the Transport Minister, Jo Johnson. On the other hand, the Yen was slightly firmer as safe-haven demand reappeared, with stocks falling by 0.7% (DJI)/1.6% (Nasdaq), weighed down by the fall in energy prices.
In other markets, WTI fell for the 10th consecutive day, to 59.25, ahead of a dead-cat bounce that allowed it to close the week back at 59.80, but still looking ominously heavy. The metals were also lower with Gold -1.2%, Silver -1.8%, and Copper -2.%, which may weigh on the Aud$ in the week ahead if it keeps falling. US bond yields were also a bit lower with traders nervously eyeing the 20% fall in the oil price; US10Y @ 3.186%, US30Y @ 3.388%.
It is probably going to be a quiet start to the week, with little on the calendar, being a partial US (Veterans Day) and much of Europe will be out too because of Remembrance Day. Things will warm up a little on Tuesday with the release of the German CPI and the UK Unemployment data but the really busy day of the week will be Wednesday, when a whole plethora of data will be released. This will include the China Retail Sales (Oct), the Japan/German/EU Preliminary Q3 GDP, UK/US October CPI and the API and EIA Crude Inventories. Thursday will kick off with the Australian Unemployment, to be followed later by the UK/US Retail Sales (Oct) and the Philadelphia Fed Mfg Survey, while Friday will see the EU CPI (Oct), US Capacity Utilisation, Industrial Production and the Kansas Fed Mfg Activity (Nov). Have a good week.
Economic data highlights will include:
Mon: US Veterans Day/EU Remembrance Holiday, NZ Electronic Card Retail Sales, NZ Monthly Inflation Gauge, China New Loans, Japan Machine Tool Orders
Tue: NZ Food Price Index, NAB Australian Business Conditions/Confidence, German CPI/HICP, German/EU ZEW Economic Sentiment Survey, UK Unemployment, US NFIB Business Optimism Index, US Monthly Budget Statement
Wed: WBC Australian Consumer Confidence, Wage Price Index, China Retail Sales, Industrial Production, Capacity Utilisation, Japan Preliminary Q3 GDP, Industrial Production, Capacity Utilisation, German Q3 GDP, UK CPI, PPI, RPI, EU Preliminary Q3 GDP, Industrial Production, Employment Change, US CPI, API Weekly Crude Oil Stock Inventory , EIA Crude Oil Stocks Weekly Change
Thu: Australian Unemployment, China House Price Index, UK Retail Sales , EU Trade Balance, New York State Empire Mfg Index, US Retail Sales, Jobless Claims, Philadelphia Fed Mfg Survey, Import/Export Index, Business Inventories,
Fri: NZ Business PMI, German Wage Price Index, EU CPI, US Capacity Utilisation, Industrial Production, Kansas Fed Mfg Activity.
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