Market Headlines
US equities rose, the S&P500 up 0.7% on the day. The AUD and NZD also performed well, after initially making one-month lows. Short-maturity bond yields fell. The US dollar index closed down 0.1% on the day. EUR ranged between 1.1433 and 1.1462. USD/JPY fell from 114.30 to 113.76. Outperformer AUD rose from 0.7277 (a one-month low) to 0.7335. NZD rose from 0.6997 (a one-month low) to 0.7048. AUD/NZD rose from 1.0370 to 1.0391. US 2yr treasury yields fell from 0.54% to 0.50%, while the 10yr yield ranged between 1.54% and 1.58%. BEI inflation rose from 2.70% to 2.72% via 2.76% - the highest on record. Markets are fully pricing the first Fed funds rate hike to be in August 2022.
Commodities: Brent crude oil futures fell 0.8% to $82, copper rose 1.1%, gold rose 0.2%, and iron ore fell 4.9% to $89.
Overnight Currency Range
Currency Pair Low High
AUD/USD 0.7277 0.7335
EUR/USD 1.1433 1.1462
GBP/USD 1.3354 1.3425
USD/JPY 113.77 114.30
NZD/USD 0.6996 0.7047
USD/CAD 1.2542 1.2604
USD/CNH 6.3690 6.3949
AUD/JPY 83.07 83.55
AUD/NZD 1.0381 1.0410
AUD Thoughts
AUD/USD bounced out of last week’s lows to close the week at 0.7330. Demand now rests ahead of 0.7260 and again nearer 0.72c while supply remains consistently staggered to 0.75c. Market believes there are signs that November’s downward correction may be complete and expect some consolidation around 0.7300.
Event Risk Data Today
Aust: RBA Assistant Governor (Economic) Ellis to appear before the House of Representatives Tax and Revenue Committee, 11:30am.
NZ: The October Business NZ PSI is expected to lift as Auckland’s restrictions eased. September’s net migration will remain subdued given closed borders.
Japan: The impact of delta and supply chain issues will hit Q3 GDP (market f/c: -0.2%) and September industrial production.
China: Although the services PMI was promising, retail sales growth will likely slow in October as delta hinders consumption (market f/c: 3.7%yr; 14.7%ytd). October’s industrial production growth is meanwhile expected to slow because of supply issues and power outages, and regulatory change should continue to place pressure on fixed asset investment (market f/c: 6.2%).
Europe/UK: Europe’s trade balance for September may narrow further, continuing the downward trend seen through 2021. November’s Rightmove house prices could see house price growth approach 2020’s peak of 6.6%yr.
US: The November Fed Empire state survey will provide a timely update on the NY manufacturing sector.