Market Afternoon Recap – November 11th

Posted on
November 11th

Key Notes for November 11th

  • Australia NAB Business confidence falls to 4
  • BRC Retail sales monitor y/y saw retail sales flat at 0%
  • Japan’s consumer confidence declines to 38.9 from 39.9 previous month; Economy watchers sentiment also falls to 44 from 47.4 previously
  • Japan preliminary machine tools orders y/y lower at 31.2%
  • US NFIB small business index improves to 96.1

The markets entered the second day of subdued trading as France, Canada and the US closed on account of bank holidays.

Australia’s NAB business confidence fell to 4 but business conditions in the NAB survey rose 12 points, the largest rise in the history of the NAB’s survey. The Australian dollar however remained muted.

The sole performer of the day was the Japanese Yen which weakened gradually on speculation that Japanese Prime Minister Shinzo Abe would call for a snap election next month. The Yen was also affected by rumors that the 2015 sales tax hike could be postponed. Yen crosses rallied yet again with the USDJPY setting a new 12-month high after breaking the previous barrier at 115.44 to make an intra-day high of 116.105.

The Nikkei 225 Index also set a new record breaking above 17100 handle, last seen during the pre-2008 era. The benchmark index is currently trading at 17247.

The Euro was trading comfortably within the range created from last week’s ECB press conference and the US NFP data. After weakening considerably during yesterday’s US trading session, the Euro was seen slowly gaining ground trading currently at 1.243 levels and remains within the technical levels. Key risks to the Euro will be the fundamentals from Germany and Eurozone scheduled for Thursday with the Eurozone stats due on Friday. Yesterday, in a speech in Germany, ECB’s executive board member Yves Mersch announced that the ECB would slow down its covered bond purchases and start buying asset-backed securities. With the ECB signaling that it was standing by to intervene should the fundamentals deteriorate, volatility in the Euro crosses is likely to spike later this week.

The British Sterling was also subdued with sideways price action for most of the trading session. The BRC’s retail sales monitor shows that the retail sales remained flat for the month on account of a rather warm autumn with online retail sales yet again taking a major market share.

Activity in the spot fx markets is expected to pick up steam with the UK set to publish its monthly labor statistics which is likely to show another strong month with expectations of the unemployment rate dropping further to 5.9%. The BoE will also be releasing its inflation report with its outlook on inflation, growth and the labor markets. The report is likely to set the tone for the British Sterling which has remained stuck within the 1.60 – 1.58 levels and also shed light on the future course for interest rate hikes in the UK. Ahead of the BoE’s inflation report hearing, New Zealand’s RBNZ will be publishing its financial stability report followed by a speech by Governor Wheeler which is expected to see some action from the Kiwi cross currencies.

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