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Forex price action was a mixed bag of beans, with traders pricing in currency-specific events amidst a generally risk-averse trading environment.

  • China’s CPI (y/y) slips from 2.5% to 2.2% vs. 2.4% expected in November
  • China’s PPI (y/y) lower from 3.3% to 2.7% in November
  • NZ quarterly manufacturing sales up from 1.8% to 2.0% in Q3 2018
  • Japan’s current account surplus narrows down from 1.33T JPY to 1.21T JPY in October
  • Japan’s GDP adjusted from -0.3% to -0.6% in Q3 2018
  • Japan’s Economy Watchers sentiment higher from 49.5 to 51.0 in November
  • AU home loans jumps from -1.0% to 2.2% in October

Major Events/Reports:

Japan’s GDP miss

Data printed earlier showed Japan’s economy contracting faster than initially expected in Q3 2018.

Japan’s GDP registered a 0.6% decline during the period, which is faster than the -0.3% preliminary reading and estimates of a 0.5% contraction.

On an annualized basis, the economy had shrank by 2.5%, which is faster than the preliminary 1.2% decrease and estimates of a 1.9% decline. That’s the steepest drop since 2014!

Natural disasters like flood and earthquake were expected to have weighed on economic activity.

What market players didn’t see was the companies cutting their spending plans. Capital expenditure fell by 2.8%, faster than the preliminary reading of -0.2% and marks the sharpest decline since Q3 2009.

Japan’s numbers, which came after seeing similar weaknesses in major countries such as China, Switzerland, Italy, and Germany, highlighted concerns that trade frictions and slower economic activity might be soon be seen on a wider scale.

Mixed risk sentiment

A weak Wall Street performance, disappointing Japanese and Chinese data, U.S.-China trade war jitters, and global growth slowdown concerns all weighed on the Asian bourses today.

  • Nikkei is down by 2.27% to 21,185.7
  • A SX 200 is down by 1.05% to 5,558.5
  • Shanghai index is down by 0.84% to 2,583.896
  • Hang Seng is down by 1.41% to 25,696.9

Commodity prices were a little more positive, with gold finding support when the dollar weakened from a soft U.S. NFP report and speculations of a not-so-hawkish Fed in 2019.

Meanwhile, crude oil benchmarks were boosted by OPEC and friends announcing that they would cut oil supply by 1.2M bpd starting January. 800K bpd would come from OPEC members, while non-members like Russia would cut theirs 400K bpd.

  • Gold is up by 0.04% to $1,248.71 per troy ounce
  • Brent crude oil is up by 1.17% to $62.01 per barrel
  • U.S. WTI is up by 0.77% to $52.52 per barrel

Major Market Mover(s):

USD

The Greenback continued to take hits against its major counterparts after a softer-than-expected NFP release supported talks that Fed members won’t be as aggressive with their rates hikes in 2019 as they were this year.

USD/JPY is down by 33 pips (-0.29%) to 112.36; USD/CHF is down by 19 pips (-0.20%) to .9877; USD/CAD is down by 22 pips (-0.16%) to 1.3230; GBP/USD is up by 17 pips (+0.13%) to 1.2746, and AUD/USD is up by 20 pips (+0.27%) to .7218.

EUR

The euro received some support on speculations that Italian PM Conte may meet with EC President Juncker to present a revised budget plan as early as Wednesday.

EUR/USD is up by 38 pips (+0.34%) to 1.1431; EUR/JPY is up by 4 pips (+0.03%) to 128.44; EUR/CHF is up by 11 pips (+0.09%) to 1.1291; EUR/AUD is up by 19 pips (+0.12%) to 1.5836; EUR/CAD is up by 26 pips (+0.17%) to 1.5203, and EUR/GBP is up by 23 pips (+0.26%) to .8968.

NZD

A stronger-than-expected quarterly manufacturing sales report and a bit of profit-taking from last week’s losses might have boosted the Kiwi across the board today.

NZD/USD is up by 34 pips (+0.49%) to .6892; AUD/NZD is down by 20 pips (-0.19%) to 1.0474; GBP/NZD is down by 59 pips (-0.32%) to 1.8494; NZD/CHF is up by 20 pips (+0.29%) to .6807; NZDJPY is up by 15 pips (+0.19%) to 77.43, and EUR/NZD is down by 20 pips (-0.11%) to 1.6586.

Watch Out For:

  • 6:30 am GMT: BOE MPC member Jon Cunliffe to give a speech in Instanbul
  • 6:45 am GMT: Switzerland’s unemployment rate expected to remain at 2.5%
  • 7:00 am GMT: Germany’s trade balance (17.2B EUR expected, 17.6B EUR previous)
  • 9:00 am GMT: Italy’s industrial production (-0.4% expected, -0.2% previous)
  • 9:30 am GMT: U.K.’s GDP report (0.1% expected, 0.0% previous)
  • 9:30 am GMT: U.K.’s manufacturing production (0.0% expected, 0.2% previous)
  • 9:30 am GMT: U.K.’s construction output (-0.4% expected, 1.7% previous)
  • 9:30 am GMT: U.K.’s goods trade balance (-10.5B GBP expected, -9.7B GBP previous)
  • 9:30 am GMT: U.K.’s industrial production (-0.4% expected, 0.0% previous)