China:
- Chinese yuan holds steady as China boosts vaccination for the elderly
- China issues notice to strengthen vaccination for the elderly
- A nothing burger of sorts from China
- China's Guangdong province to allow close contacts of Covid cases to quarantine at home
Inflation:
- Spain November preliminary CPI +6.8% vs +7.4% y/y expected
- Here's a slight splotch to the softer Spanish inflation report
- North Rhine Westphalia November CPI +10.4% vs +11.0% y/y prior
- Bavaria November CPI +10.9% vs +11.0% y/y prior
- Saxony November CPI +9.9% vs +10.1% y/y prior
Headlines:
- Dollar holds lower so far in European trading
- Bond yields fall on more signs of cooler inflation
- Eurozone November final consumer confidence -23.9 vs -23.9 prelim
- UK October mortgage approvals 58.98k vs 60.20k expected
- Switzerland Q3 GDP +0.2% vs +0.3% q/q expected
Markets:
- AUD leads, USD lags on the day
- European equities slightly higher; S&P 500 futures up 0.3%
- US 10-year yields down 4.3 bps to 3.658%
- Gold up 0.8% to $1,754.48
- WTI crude up 2.4% to $79.11
- Bitcoin up 1.8% to $16,4787
The handover from Asia to Europe saw the focus turn towards China's Covid control press conference, in which health officials boosted vaccination for the elderly. The announcement didn't quite match the optimism in markets to start the day but is still a step in the right direction towards the re-opening for China.
As Chinese equities roared higher, that fed into more positive sentiment in Europe although the optimism has been slightly tempered with since.
Bonds rallied on softer inflation numbers from Spain and German states, and that arguably also helped to keep broader market sentiment in a decent spot. 10-year German bund yields are down 11 bps to 1.88% ahead of the national consumer price inflation reading later, which is estimated to come in slightly softer than October.
In between all of that, the dollar is pinned lower across the board with month-end flows also a consideration.
EUR/USD is up 0.3% to 1.0365 but off earlier highs of 1.0395 with price action holding below its 200-day moving average. USD/JPY is looking a little heavy, dragged down by lower yields as the pair holds in and around 138.00 for the most part.
GBP/USD raced higher to 1.2065 to start the session but gains cooled after running into its 100-hour moving average and now price is keeping close to the 1.2000 handle.
Meanwhile, commodity currencies are holding modest gains although USD/CAD has seen its drop erased in a push from 1.3410 to 1.3490 despite higher oil prices on the day.
AUD/USD is up 1.1% to 0.6725 with buyers erasing yesterday's drop, with the mood helped by gains in the Chinese yuan as well.
There are quite a number of moving parts at play to start the new week and while the risk mood is a key driver of trading sentiment, month-end flows will make things a bit tricky in the sessions ahead before we get settled.
