Headlines:
- Heads up: Fed chair Powell to speak on inflation later today
- Dollar poised to wrap up its worst month in over a decade
- Eurozone November preliminary CPI +10.0% vs +10.4% y/y expected
- France November preliminary CPI +6.2% vs +6.2% y/y expected
- BOE's Pill: Our base case does not involve rates reaching 5.25%
- BOE's Pill: Inflation expected to rapidly fall in 2H 2023
- Beijing says community Covid testing can be dropped for people who have no need to go out
- US MBA mortgage applications w.e. 25 November -0.8% vs +2.2% prior
- Germany November unemployment change 17k vs 13k expected
- Switzerland November KOF leading indicator index 89.5 vs 91.3 expected
- France Q3 final GDP +0.2% vs +0.2% q/q prelim
- Italy Q3 final GDP +0.5% vs +0.5% q/q prelim
Markets:
- AUD and NZD lead, JPY lags on the day
- European equities higher; S&P 500 futures up 0.2%
- US 10-year yields down 1.3 bps to 3.734%
- Gold up 0.6% to $1,760.73
- WTI crude up 2.2% to $79.91
- Bitcoin up 2.2% to $16,840
There were quite a number of headlines to sieve through during the session but the crux of it is that we saw Eurozone headline inflation fall from a record high, although core inflation remains strong and unchanged in November.
That kept European stocks buoyed going into month-end trading, with the market mood also continuing to benefit from optimism on China's eventual re-opening. The Hang Seng closed over 2% higher and that translated to a more positive tone in Europe, though US futures are little changed but just a touch higher on the day.
Treasuries are also slightly more bid but just be wary that we have seen two turnaround days in US trading and that could be the case again today, with an added twist amid month-end flows.
The dollar is holding lower as a result, poised for its worst monthly performance since September 2010.
EUR/USD is up 0.4% to 1.0365 but off earlier highs of 1.0380, holding below its 200-day moving average at 1.0372. Then, USD/JPY is little changed as the yen is also under pressure with the pair holding around 138.50-70 levels mostly - just keeping away from daily support around 138.45.
Meanwhile, GBP/USD is up 0.3% to near 1.2000 while commodity currencies are putting in a good shift on the day. The bid in USD/CAD yesterday, which was sparked by the RBC acquisition of HSBC assets, is now being covered back with the pair down 0.5% to 1.3515. The drop is also helped by higher oil prices on the back of the optimistic risk tone tied to China in the past few sessions.
AUD/USD is up 0.6% to 0.6730 and pushing back above its 100-day moving average but still keeping below key resistance in the form of its 61.8 Fib retracement level at 0.6767.
There's still plenty to play for before the end of today, with month-end flows and Fed chair Powell's speech to influence trading sentiment before we call it a wrap for November.
