Extension was the name of the game during the Asian session, as traders mostly took cues from previous sessions ahead of today’s top-tier events.
- New Zealand’s current account deficit balloons from 1.63B NZD to 6.15B NZD in Q3 2018
- Australia’s MI leading index dips by 0.1% vs. 0.1% growth in November
- Japan’s trade deficit widens from 0.29T JPY to 0.49T JPY in November
- U.S., China hold “vice ministerial level” phone call over trade and economic issues”
- U.K. Cabinet ramps up preps for a “no-deal” Brexit
Japan’s trade report misses
Data from the world’s third largest economy reflected the trade balance shifting to a deficit of 737.3B JPY from a 105.2B JPY surplus from a year earlier in November.
A closer look showed that imports shot up by an annualized rate of 12.5%, faster than the expected 11.5% uptick after October’s 19.9% jump.
Meanwhile, exports only inched 0.1% higher for the month. For context, October saw an 8.2% export growth and analysts had estimated a 1.8% increase.
What worried other traders is the fact that Japan’s exports to the U.S. (from 11.6% to 1.6%) and China (from 9.0% to 0.4%) have dramatically slowed down from a year ago.
Overall, today’s numbers highlighted external (read: global trade war) risks for the export-dependent Japanese economy.
Mixed risk sentiment
With no fresh theme to rock the markets, traders took cues from previous sessions’ catalysts for direction. In fact, today’s low-key risk-averse trading environment came from a combo of different factors.
A surprisingly bearish debut by newly-IPO’ed Softbank Corp weighed on Nikkei’s performance. News of British officials ramping up their “no-deal Brexit” prep also didn’t make the bulls happy.
And then there’s the small issue of the Fed possibly signaling fewer (if any) rate hikes in 2019. Rather than price in the bajillions of possibilities prices can react later, some traders have chosen to get out of their equity trades.
- Nikkei is down by 0.79% to 20,949.1
- A SX 200 is up by 0.08% to 5,571.5
- Shanghai index is down by 0.25% to 2,570.183
- Hang Seng is up by 0.16% to 25,855.3
Commodity prices were less bearish, with gold pushed higher by lower dollar demand while crude oil clawed its way back up from U.S. session lows to end the Asian session flat.
- Gold is up by 0.12% to $1,250.74 per troy ounce
- Brent crude oil is flat at $60.27 per barrel
- U.S. WTI is flat at $45.86 per barrel
Major Market Mover(s):
Expectations of a “dovish hike” by the Fed later today as well as a dip in U.S. Treasury yields both weighed on the dollar’s prospects.
USD/JPY is down by 22 pips (-0.19%) to 112.30; GBP/USD is up by 37 pips (+0.30%) to 1.2672; EUR/USD is up by 25 pips (+0.22%) to 1.1386; USD/CHF is down by 4 pips (-0.04%) to .9921, and USD/CAD is down by 3 pips (-0.02%) to 1.3459.
EUR and GBP
Much like in yesterday’s London session trading, the euro and the pound caught most of the bullish momentum from the dollar’s weakness.
GBP/USD is up by 37 pips (+0.30%) to 1.2672; GBP/JPY is up by 14 pips (+0.10%) to 142.31; GBP/CHF is up by 33 pips (+0.27%) to 1.2572; EUR/GBP is down by 2 pips (-0.03%) to .8984, and GBP/AUD is up by 17 pips (+0.10%) to 1.7611.
EUR/USD is up by 25 pips (+0.22%) to 1.1386; EUR/JPY is up by 7 pips (+0.05%) to 127.86; EUR/CHF is up by 21 pips (+0.18%) to 1.1295, and EUR/AUD is up by 4 pips (+0.03%) to 1.5824.
The Loonie extended its U.S. session bearish momentum and continued to fall even though crude oil benchmarks have paused from their selloffs.
CAD/JPY is down by 11 pips (-0.13%) to 83.44; EUR/CAD is up by 28 pips (+0.18%) to 1.1295; GBP/CAD is up by 42 pips (+0.25%) to 1.7055, and NZD/CAD is up by 24 pips (+0.26%) to .6811.
Watch Out For:
- 7:00 am GMT: Germany’s PPI (-0.1% expected, 0.3% previous)
- 9:30 am GMT: U.K.’s inflation figures. Read our mini trading guide so you know what to expect!
- 9:30 am GMT: U.K.’s PPI input (-2.8% expected, 0.8% previous)
- 9:30 am GMT: U.K.’s PPI output (-0.1% expected, 0.3% previous)
- 9:30 am GMT: U.K.’s house price index (y/y) (3.3% expected, 3.5% previous)
- 11:00 am GMT: U.K.’s CBI industrial order expectations (6 expected, 10 previous)