29 Nov: Powell turns dovish on rate outlook. Stocks soar, US$ lower. German CPI, FOMC Minutes in focus, Thursday.

By | November 29, 2018

The U$ is sharply lower (DXY -0.6%),while stocks soared by around 2% after Fed Chair Powell said that the policy rate was ‘just below’ neutral, easing worries of a faster pace of interest rate hikes next year. This comes less than 2 months after saying rates were probably “a long way” from that point, and one day after Fed Vice Chair Clarida backed further interest rate hikes while noting the importance of monitoring economic data. Seems like a pretty confused outlook to me, and now we will look for further muddying of the waters, with the release of the FOMC Minutes, due later in the session.

Elsewhere, Cable staged a partial recovery assisted by the move in the dollar although the BOE has warned that crashing out of the EU without a deal could trigger a deep and damaging recession, with worse consequences for the UK economy than the 2008 financial crisis. The commodity currencies are sharply higher, with both the Aud and the Kiwi making strong gains closing near their highs. Note though that the Iron Ore price has collapsed by around 11% today, a huge fall and may impede further gains for the Aud$, in particular.

Looking ahead to Thursday, which will kick off with the NZ, ANZ Activity Outlook and Business Confidence, to be followed by the Australian, October, New Home Sales and CAPEX (exp 1%) data.  The BOJs Masai will also be speaking in the Asian time zone. Europe will be pretty busy, with the focus on the German Preliminary CPI (exp 0.1%mm, 2.4%yy; HICP 0.1%mm, 2.4%yy), while the US will also be busy, with the Personal Consumption/ Expenditure figures – (Price Index, exp 0.2%mm 1.9%yy – Oct, Personal Spending exp +0.4% – Oct), Pending Home Sales (exp +0.5%). The focus though is likely to be on the FOMC Minutes as traders look to see what the Fed have in store for December, and then for 2019. After the Fed statements of the last 24 hours, be very nimble. Have a good day.

Economic data highlights will include:

Thur: NZ Activity Outlook, Business Confidence, Australian HIA New Home Sales,  German Unemployment, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Personal Consumption/Expenditure, Pending Home Sales, FOMC Minutes

CURRENCIES
EURUSD: 1.1382
Res  1.1400  1.1420  1.1440
Sup  1.1370  1.1350  1.1330
USDJPY: 113.51
Res  113.75  114.00  114.20
Sup  113.40  113.15  112.85
GBPUSD: 1.2839
Res  1.2865  1.2905  1.2935
Sup  1.2800  1.2765  1.2725
USDCHF: 0.9925
Res  0.9955  0.9980  1.0005
Sup  0.9910  0.9880  0.9850
AUDUSD: 0.7323
Res  0.7340  0.7360  0.7380
Sup  0.7300  0.7280  0.7255
NZDUSD: 0.6883
Res  0.6900  0.6925  0.6950
Sup  0.6855  0.6825  0.6790
INDICES / COMMODITIES
S&P.fs: 2728
Res  2740  2750  2760
Sup  2720  2710  2700
DJ30.fs: 25265
Res  25300  25400  25500
Sup  25185  25095  25000
SPI200.fs: 5751
Res  5770  5790  5815
Sup  5735  5715  5695
XAUUSD: 1221
Res  1225  1230  1235
Sup  1220  1215  1210
XAGUSD: 14.33
Res  14.40  14.50  14.60
Sup  14.25  14.15  14.05
WTI.fs: 50.90
Res  51.80  52.45  53.35
Sup  50.25  49.50  48.65