Article Highlights

  • Japan’s BSI manufacturing index up from 2.9 to 7.5 in Q4 2016
  • AU home loans slips by 0.8% vs. -0.9% expected, 1.5% previous
  • China’s CPI (y/y) shoots up by 2.3% vs. 2.2% growth expected, 2.1% previous
  • China’s PPI (y/y) up by 3.3% vs. 2.2% expected, 1.2% previous
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Ho-hum. With not a lot of data on the docket, the major forex pairs traded on tight ranges for most of the Asian session.

Major Events:

China’s CPI and PPI reports – The world’s second largest economy printed a 2.3% consumer price growth from a year earlier in November, faster than the expected 2.2% uptick and 2.1% growth in October. That’s a seven-month high, yo! Apparently, food prices shot up by 4.0% while non-food cost rose at a slower 1.8%. Meanwhile, cost of consumer goods gained 2.1% and those of services advanced 2.4%.

Meanwhile, producer prices, an indicator of factory-gate prices, showed a 3.3% growth from a year earlier, marking the third consecutive monthly increase and the fastest pace since October 2011. This is good news for China’s companies, as rising industrial profits help them adjust to higher costs and lower demand.

Australia’s home loans – The number of home loans issued by Australian authorities slipped by 0.8% in October after growing by 1.5% in September. Not a bad deal considering that market players had expected a 0.9% dip.

Investment lending for homes, a closely watched gauge of fixed residential property loans, shot up by 0.7% for the month after growing by 4.6% in September. Loans for established dwellings fell by 1.0% while purchases of new dwellings also slipped by 0.3%.

Overall, the numbers paint a mixed picture for Australia’s housing market, something that the RBA had already called in its latest monetary policy. Keep your eyes glued to the tube for any updates, as market players will surely watch out for signs that Australia may indeed dip into a technical recession by the end of the year.

Focus on the Fed – Now that Mario Draghi and his team have said their piece, all eyes will be on the much-awaited Fed policy decision next week. Analysts believe that a rate hike is all but priced in, so it’s not surprising that the dollar’s rally has lost momentum even though some bulls are still trying to get their trades in.

This is also probably why the Asian bourses traded mixed today, with Nikkei shooting up by 1.28% on the back of the yen’s weakness and U.S. bond yield strength. Australia’s A SX 200 is also up by 0.31% and the Shanghai index is up by 0.66%, though Hang Seng missed the bus and is down by 0.42%.

Major Market Movers:

USD – The Greenback managed to sneak in a couple more pips in a low-volatility trading environment.

EUR/USD inched up by 6 pips (+0.06%) to 1.0606, USD/JPY rose by another 37 pips (+0.32%) to 114.43, and USD/CAD popped up by 16 pips (+0.12%) to 1.3204.

AUD – The Aussie found some support on the back of an upside surprise in Australia’s home loans data and China’s positive CPI and PPI figures.

AUD/USD may have only inched up by 4 pips (+0.05%) to .7456 but AUD/JPY shot up by 23 pips (+0.27%) to 85.32, and EUR/AUD slipped by 5 pips (-0.04%) to 1.4223.

Watch Out For:

  • 7:45 am GMT: Switzerland unemployment rate expected to remain at 3.3%
  • 8:00 am GMT: German trade balance (20.8B EUR expected, 21.3B EUR previous)
  • 8:45 am GMT: French government budget balance
  • 8:45 am GMT: French industrial production (0.6% expected, 1.1% previous)
  • 10:30 am GMT: U.K. goods trade balance (-11.9B GBP expected, -12.7B GBP previous)
  • 10:30 am GMT: U.K. construction output (0.2% expected, 0.3% previous)
  • 10:30 am GMT: U.K. consumer inflation expectations

See also:

U.S. Session Recap
London Session Recap

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