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The post-FOMC party for the bears extended into the Asian session as traders priced in higher borrowing costs and weak data releases.

  • Australia adds net of 37,000 jobs in November vs. 20,000 expected, 28,700 previous
  • Australia’s unemployment rate inches up from 5.0% to 5.1% in November
  • Australia’s unemployment rate inches up from 5.0% to 5.1% in November
  • Japan’s all industries activity higher from -1.0% to +1.9%
  • BOJ keeps policies steady as expected in December
  • BOJ Governor Kuroda’s presser on tap
  • U.S. Senate approves stopgap bill that will keep government open until February

Major Events/Reports:

Mixed jobs data from Australia

Data from the Land Down Under showed the economy adding a net of 37,100 in November, which is more than the 20,000 that markets had expected and October’s 28,700 net additions.

The labor force participation rate also ticked higher from 65.6% to 65.7%, which is partly the reason why the unemployment rate inched up from 5.0% to 5.1% for the month.

A closer look tells us that part-time employment boosted the numbers with its 43,400-net increase against the 6,400 full-time jobs lost. Meanwhile, the monthly hours worked in all jobs fell by 0.2%.

Not surprisingly, the mixed numbers didn’t inspire one-directional moves for the Aussie today.

BOJ keeps policies unchanged

As expected, the Bank of Japan (BOJ) didn’t make any changes to its policies in December.

Specifically, interest rates are kept at -0.1%; 10-year JGB yields targets remain “around zero percent,” and forward guidance is focused on maintaining “extremely low levels of short- and long-term interest rates for an extended period of time.”

What makes this release interesting is that the central bank cited (1) U.S. macroeconomic policies, (2) protectionist policies and their impact on the markets, (3) developments in the emerging and commodity-exporting economies, (4) Brexit, and (5) geopolitical risks as factors that can affect its optimistic outlook.

Since the event didn’t really reveal any new bombshells, the BOJ’s event was mostly shrugged off by Asian session traders.

Overall risk aversion

Oops, they did it again! As mentioned in the U.S. session recap, Fed Governor Jerome Powell and his team shrugged off pressure against raising their rates and executed a rate hike anyway. Not only that, but they also lowered their growth and inflation expectations!

The prospect of higher borrowing rates, lower growth for Uncle Sam, and poor Wall Street performance dragged the Asian bourses lower.

  • Nikkei is down by 2.70% to 20,420.2
  • A SX 200 is down by 0.67% to 5,549.0
  • Shanghai index is down by 0.82% to 2,528.727
  • Hang Seng is down by 1.13% to 25,574.3

Commodity prices mirrored the risk-averse vibe, with gold taking advantage of some safe-haven action while crude oil bears went back to pricing in oversupply and global demand concerns.

  • Gold is up by 0.18% to $1,244.80 per troy ounce
  • Brent crude oil is down by 0.14% to $56.38 per barrel
  • U.S. WTI is down by 0.27% to $47.06 per barrel

Major Market Mover(s):

NZD

The surprisingly weak GDP release, combined with risk aversion in the markets and ANZ calling a rate cut in late 2019 all dragged the Kiwi lower across the board.

NZD/USD is down by 24 pips (-0.36%) to .6742; NZD/JPY is down by 35 pips (-0.46%) to 75.73; EUR/NZD is up by 70 pips (+0.42%) to 1.6881; AUD/NZD is up by 38 pips (+0.36%) to 1.0540, and NZD/CHF is down by 21 pips (-0.31%) to .6707.

GBP

There were no direct catalysts for the pound today, but traders might be pricing in their bets ahead of the Bank of England (BOE)’s policy statement in the next trading session.

Word around the hood is that the central bank will likely refrain from making changes or policy guidance until there’s significant progress on the Brexit negotiations.

GBP/USD is up by 11 pips (+0.09%) to 1.2622; GBP/CHF is up by 16 pips (+0.12%) to 1.2557; EUR/GBP is down by 3 pips (-0.03%) to .9018; GBP/AUD is up by 21 pips (+0.12%) to 1.7760, and GBP/CAD is up by 31 pips (+0.18%) to 1.7035.

CAD

Much like oil prices, the Loonie lost its previous sessions’ gains and ended the session lower against its counterparts.

USD/CAD is up by 13 pips (+0.10%) to 1.3497; CAD/JPY is down by 19 pips (-0.22%) to 83.22; CAD/CHF is down by 4 pips (-0.06%) to .7371; EUR/CAD is up by 23 pips (+0.15%) to 1.5362, and GBP/CAD is up by 31 pips (+0.18%) to 1.7035.

Watch Out For:

  • 7:00 am GMT: Switzerland’s trade balance (3.20B CHF expected, 3.75B CHF previous)
  • 9:00 am GMT: Euro Zone’s current account (18.4B EUR expected, 17.0B EUR previous)
  • 9:30 am GMT: U.K.’s retail sales (0.3% expected, -0.5% previous)
  • 11:00 am GMT: U.K.’s CBI realized sales (16 expected, 19 previous)
  • 12:00 pm GMT: BOE’s policy decision. Read our mini trading guide if you’re planning on trading the event!