- AU Westpac consumer sentiment slips by 3.9% in December vs. 1.1% dip in November
- Japan’s Tankan manufacturing index clocks in at 10 as expected vs. 6 previous
- Japan’s Tankan non-manufacturing index remains at 18 vs. 19 expected
- AU new motor vehicle sales declines by 0.6% vs. 2.4% decrease in October
A positive business survey from Japan pushed the yen a bit higher across the board, though price action is generally limited due to the upcoming FOMC statement.
Japan’s Tankan surveys – Confidence among large manufacturers clocked a reading of 10 in the three months to December, which marks the first time in SIX quarters that the index has shown improvement.
Turns out, big manufacturers are feeling the love for the economy due to the yen’s sharp losses and Trump’s recent Presidential victory. Manufacturing companies also maintained their upbeat spending plans, which supports speculations that the BOJ will hold its fire in the next couple of months.
For newbies out there, you should know that Japan’s Tankan manufacturing and non-manufacturing indices are simply surveys measuring the number of big producers who are optimistic and pessimistic over the economy. A positive reading hints of improving conditions. It’s also closely-watched by the Bank of Japan (BOJ), as these companies make up a huge chunk of Japan’s industries.
Meanwhile, confidence among big companies in the service sector just missed analyst expectations, remaining at 18 when analysts had expected an improvement to 19. Not surprising after poor weather had taken its toll on private consumption.
It’s also important to note that outlook for both manufacturing and non-manufacturing companies edged lower for the quarter, reflecting unease over next year’s price action. For now though, it looks like it’s all good in the hood.
Cautious optimism for equities – The Asian bourses continued to track Wall Street’s strong performance yesterday. The moves were somewhat muted though, as Asian session traders brace for the upcoming FOMC statement.
Nikkei ended the session 0.1% lower, while Australia’s A SX 200, which found support from a corporate news report, edged 0.71%. Ditto for Hang Seng and the Shanghai Index, which shot up by 0.52% and 0.04% respectively.
Oil prices slip – A weekly report by the American Petroleum Institute’s (API) showed a surprise inventory build to the tune of 4.68 million barrels instead of the expected 1.5 million-barrel draw for the week. The report underscored concerns that the OPEC’s recent deal won’t have much impact when competitors like Uncle Sam could simply pick up the slack and continue to flood the markets with oil.
Brent crude oil is down by 1.20% to $55.05 while U.S. crude oil prices is also down by 1.30% to $52.29.
Major Market Movers:
Comdolls – Higher-yielding currencies like the comdolls lost ground against their lower-yielding counterparts, as some Asian session forex traders unwind their risky positions ahead of today’s FOMC statement.
AUD/USD dipped to a low of .7481 before capping the session at .7493 (-0.04%) while USD/CAD also popped up by 19 pips (+0.15%). Meanwhile, AUD/JPY is down by 8 pips (-0.09%) to 86.32 and CAD/JPY dropped by 15 pips (+0.17%) to 87.69.
- 5:30 am GMT: Japan’s revised industrial production expected to remain at 0.1%
- 8:45 am GMT: French final CPI expected to remain at 0.0%
- 9:15 am GMT: Switzerland’s PPI (-0.1% expected, 0.1% previous)
- 10:30 am GMT: U.K. employment reports (average earnings, claimant count change, unemployment rate). Make sure you read Forex Gump’s mini trading guide about the releases!
- 11:00 am GMT: Switzerland’s ZEW economic expectations
- 11:00 am GMT: Euro Zone industrial production (0.2% expected, -0.8% previous)
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