Good Morning,
Market Headlines
US equity markets rose after official acknowledgement that Joe Biden won the US presidential election. The S&P500 is up 1.6% and is poised to make a record closing high. The defensive US dollar fell and risk-sensitive currencies outperformed, while bond yields rose. Commodities, Brent crude oil futures rose 4.0% to $47.90, copper rose 1.3%, iron ore rose 1.0% to $127.35, and gold fell 1.6%.
Currency
AUD/USD: 0.7312 – 0.7367 (3 month high)
EUR/USD: 1.1842 – 1.1894
GBP/USD: 1.3294 – 1.3380
USD/JPY: 104.15 – 104.76
USD/CAD: 1.3011 – 1.3090
NZD/USD: 0.6947 – 0.7005 (the highest since June 2018)
AUD/JPY: 76.34 – 76.93
AUD/NZD: 1.0500 – 1.0543
AUD Thoughts
AUD/USD broke the key technical resistance at 0.7340 overnight with the next level now at 0.7400. Demand has likely been raised with move in spot and now lies between 0.7300/10 and again ahead of 0.7255.
Event Risk Data Today
Australia: Market is looking for a 3.8% decline in Q3 construction work, driven by falls in private engineering and private building work. Public works are expected to provide some offsetting support, +1.5%.
NZ: The RBNZ Financial Stability Report will likely focus on the resurgence in the housing market and the growth in mortgage lending. Lending has been spurred on by the rebounding economy, record low interest rates, and the removal of limits on high loan-to-value ratio lending in April. There will be much interest in the press conference (at 11am NZT), following yesterday’s proposal by FM Robertson to amend the RBNZ’s remit to include house prices.
US: Initial jobless claims will reveal whether last week’s uptick was an anomaly or the signal of a softening labour market (market f/c: 730k). October wholesale inventories should remain expansionary as firms continue to restock (market f/c: 0.4%). Thinning stimulus and rising case counts will serve as a headwind to October personal income (mkt f/c: 0.2%) and personal spending (mkt f/c: 0.4%).
Turning to consumer prices, the October PCE deflator should reveal an absence of inflationary pressures (estimate: 0.0% m/m, 1.4% y/y). Durable goods orders should continue to expand in October, but investment is set to lag the consumer recovery (mkt f/c: 1.4%). The third estimate of Q3 GDP is expected to remain unchanged at 33.1%. Turning to the housing market, new home sales have been elevated ahead of the October update, but supply constraints may hamper turnover (market f/c: 1.7%). Finally, the FOMC’s views on risks are likely to be the focus of the November meeting Minutes.