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It was all good in the forex hood today, as the U.S. averts a government shutdown while overall risk appetite boosted the higher-yielding currencies.

  • Japan’s final GDP (q/q) up by 0.6% vs. 0.4% expected, 0.3% previous
  • Japan’s current account surplus jumps from 1.84T JPY to 2.44T JPY in October
  • Japan’s cash earnings (y/y) up by 0.6% vs. 0.8% expected, 0.9% previous
  • AU home loans slips by 0.6% vs. 2.2% decrease expected, 2.5% decline in September
  • China’s trade surplus improves from 254B CNY to 264B CNY in November
  • China’s trade surplus improves from $38.1B to $40.2B in November
  • Japan’s Economy Watchers Sentiment pops up from 52.2 to 55.1 in November

Major Events/Reports:

China’s strong trade data

Data from the world’s second largest economy showed a surplus of $40.21B for the month of November, which is higher lower than the 44.24B figure a year earlier, but is higher than the expected 35B surplus.

A closer look tells us that exports shot up by a whopping 12.3% from a year earlier in November. Thanks to increased global demand, outbound shipments beat October’s 6.9% annual growth and the expected 5.0% uptick.

Meanwhile, imports also rocketed by an annualized growth of 17.7% in November. This marked the 13th straight month of growth AND the fastest since September. Apparently, increased crude oil imports as well as higher demand for other commodities boosted inbound shipments.

U.S. averts government shutdown

Another day, another problem solved! A few hours earlier U.S. lawmakers officially kicked the government shutdown can down the road by voting to fund a wide range of federal programs through December 22.

The House of Representatives approved the legislation in a 235-193 vote, which was then turned into a Senate bill that pushed through on an 81-14 vote.

The bill gives the lawmakers about two weeks to talk through the next government funding bill before funds run out again by December 23.

In the meantime, the avoidance of a government shutdown and the speed of which the bill was approved inspired optimism that the Senators – who have to shake hands on a bunch of funding issues over the next couple of days – can pull together a decent funding programme for the year ahead.

Overall risk appetite

The recovery in U.S. equities and the prevention of a government shutdown this week helped boost overall risk appetite in the markets.

  • Nikkei is up by 1.09% to 22,743;
  • Australia’s A SX 200 is up by 0.25% to 5,992.70;
  • Hang Seng is up by 0.06% to 28,538.00, and
  • China’s A50 is up by 0.83% to 12,970.38.

Major Market Mover(s):

Comdolls

Commodity-related currencies enjoyed a double boost of better-than-expected trade data from China and overall risk appetite in the markets.

AUD/USD is up by 5 pips (+0.07%) to .7516 while
NZD/USD is up by 3 pips (+0.04%) to .6835.

JPY

The low-yielding yen didn’t find any support from stronger-than-expected Japanese data. Instead, it was dragged lower by overall risk appetite.

USD/JPY is up by 21 pips (+0.19%) to 113.30;
EUR/JPY is up by 19 pips (+0.14%) to 133.32;
AUD/JPY is up by 22 pips (+0.26%) to 85.15;
CAD/JPY is up by 18 pips (+0.21%) to 88.15, and
NZD/JPY is up by 19 pips (+0.25%) to 77.44.

Watch Out For:

  • Italian markets out on Immaculate Conception Day holiday
  • 7:00 am GMT: Germany’s trade balance (22.0B EUR expected, 21.8B EUR previous)
  • 7:45 am GMT: France’s budget balance
  • 7:45 am GMT: France’s industrial production (-0.1% expected, 0.6% previous)
  • 9:30 am GMT: U.K.’s manufacturing production (0.1% expected, 0.7% previous)
  • 9:30 am GMT: U.K. goods trade balance (-11.5B GBP expected, -11.3B GBP previous)
  • 9:30 am GMT: U.K. construction output (0.2% expected, -1.6% previous)
  • 9:30 am GMT: U.K. industrial production (0.0% expected, 0.7% previous)