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The U-S Dollar weakened against other major currencies, except the Japanese yen, as risk
sentiments were- lifted mildly by positive manufacturing data from China. The HSBC china
manufacturing PMI rose to 50.4 in November, compared to 49.5 in October. That's the first
expansion reading in 13 months and signals mild growth in the sector. HSBC said in a
statement that the reading confirms recovery continues to gain momentum towards the year
end, even though it's still the early stage and remains fragile. It said that the data
still calls for a continuation of policy easing. Asian equities are broadly higher with the
Australian all ordinaries index up over 1.1% and the Hong Kong HSI up .7% at the time of
writing. The Nikkei is also supported by weakness and the Yen is up over 1%.
Technically, note that the USD/CHF has taken out a minor support level at 0.9380, while
GBP/USD also took out a minor resistance at 1.5957. Both argue that the dollar might have
at least topped in the near term. While EUR/USD is still held below the 1.2882 minor resistance,
close attention would now be paid to this level to see if EUR/USD aligns itself with
other dollar pairs. Nonetheless, USD/CAD and AUD/USD are both stuck in familiar range.
The Japanese Yen's selloff accelerated overnight after Liberal Democratic Party leader Abe,
the most likely candidate to succeed Noda as the next prime minister after the December
16th election, pledged to achieve 3% economic growth and set a 2% inflation target. Analysts
are perceiving the targets as implication of extremely aggressive policies that go beyond
quantitative easing, but also a targeted yen weakness policy. There was even talk that
U-S Dollar Japanese Yen could go back to above the 100 level should the LDP follow through
in the implementation of these policies.
After a brief dip following the disappointing EcoFin meeting on Greece, the Euro quickly
regained ground. Markets seem to be rather unworried about the delay as most analysts
expect Greece will eventually get its bailout fund. A further meeting is scheduled for November
26th, next Monday, between Eurozone finance minister on the issue. Indeed, German Chancellor
Merkel said that there are "chances to get a solution on Monday". Finance minister Schaeuble
also said that the leaders have agreed that the financing gap can be closed largely through
a debt buyback program".
Looking ahead, Eurozone PMIs will be the main focus today, as well as Spain's 10 year bond
auction. The US will be on thanksgiving holiday but Canada will release retail sales in US
session.