Yesterday’s Asian session was extremely interesting at least for 3 reasons.
First of all, an out-of-date interview with PBOC’s governor was published on Bank’s website. It would be nothing extraordinary but he called for creating stronger links between Shenzen and Hang Seng (just as it took place between Shanghai and Hangseng a year ago).
It was bullish for main Chinese indexes and indeed all of them rallied with Shanghai close at +4.31%. Funny fact is that the interview is dated on May and with $5tn rout, investors were skeptical up to date. Share markets in China were also bolstered by data which showed activity in China’s services sector expanded at its fastest pace in three months in October.
Major piece of data from New Zealand came yesterday. New Zealand employment unexpectedly fell for the first time in three years in the third quarter, driven by a decline in part-time workers, and the participation rate declined further from a record high. With poor dairy products auction, the bearish pressure on NZD should be maintained.
The AUD surged post positive Trade Balance reading, the deficit was smaller than expected and the data overall was positive so it delivered a short-term relief for Aussie, however it might be short-lived with fundamentals pointing to further decline. The appreciation was small despite a return of risk-on mode and Asian indexes rally.
Nagy from the NBH announced "2-3 unorthodox" easing steps in Hungary, HUF sharply depreciated.
Yesterday afternoon saw the weekly release from the DOE regarding changes in it’s inventories which added to the selling pressure in both WTI and Brent. Both main oil benchmarks experienced a tough day losing over 3%. Such moves in the commodities markets did not go unseen on the equities market. Companies within the energy sector were the weakest among S&P 500 firms.
The other main story as we review the European session came from a strong appreciation in the US dollar on the back of a better than expected ADP employment change report and strong ISM manufacturing number .
Janet Yellen added her fair share to strong dollar story, saying that December is a live meeting and data will decide whether Fed may decide to normalize its monetary policy. EURUSD is trading close to 1,0850 as an aftermath of those events.
Overnight RBA Governor Stevens is due to speak at 10:25 GMT, and tomorrow we see the much anticipated Super Thursday from the Bank of England beginning with data releases at 12:00 GMT. Initial jobless claims will be closely viewed to see if they support today’s stronger ADP figure, going into Friday’s Non-farm Payroll releases.