20 November 2009 at 7:28 GMT
BOJ keeps rates unchanged but again upgrades its assessment of the economy
Headlines – previous session
- CA Sep. Int’l Securities Transactions out at C$13.59b vs. C$3.0b expected and revised C$5.067b prior
- CA Sep. Wholesale Sales out at +0.2% m/m vs. +1.0% expected and revised -1.5% prior
- CA Oct. Leading Indicators out at +0.7% m/m, as expected, vs. revised 1.2% prior
- US Weekly Initial Jobless Claims out at 505k vs. 504k expected and revised 505k prior
- US Weekly Continuing Claims out at 5,611k vs. 5,598k expected and revised 5,650k prior
- US Oct. Leading Indicators out at +0.3% vs. +0.4% expected and +1.0% prior
- US Nov. Philadelphia Fed Index out at 16.7 vs. 12.2 expected and 11.5 prior
- US Q3 Mortgage Delinquencies out at 9.64% vs. 9.24% prior
- NZ Oct. Credit Card Spending out at -0.4% y/y vs. -2.3% prior
- JP BOJ Leaves Rates Unchanged at 0.1%
Themes to watch – upcoming session
(All times GMT)
- GE PPI (0700)
- EU ECB’s Weber to speak (0800)
- HK CPI 0830)
- Denmark Consumer Confidence (0830)
- EU ECB’s Trichet to speak (1030)
Market Comments:
Another session of general risk aversion trading yesterday as the dollar continued to edge higher and JPY crosses approached key support levels. The activity most mostly confined to the early stages though with the latter part spent in lazy ranges. Notably EURJPY survived another attempt on the 200-day MA for the fourth time in as many months while gold bounced off 55-hour MA on the short-term charts.
The EUR was assisted on its path downwards with comments from EU’s Juncker who commented that the EUR was overvalued and the dollar too weak. He announced that he would also be speaking to Chinese officials, with Trichet, on Nov 28.
US data was generally better than expected though, with the Philly Fed Index close to a 4-year high at 16.7 vs. 12.2 expected, and initial jobless claims steady at 505k, unchanged from the revised figure for last week. The Conference Board's October leading economic indicators rose by 0.3% (with consensus +0.4% m-o-m) after a 1.0% rise in the previous month. It was the seventh straight month-on-month improvement and potentially a signal that that economic activity will continue to grow over the next few months.
Apart from the data, there was a slew of Fed-speak with the potential to influence markets. Fed’s Fisher noted that the US economy was "quite flaccid", warning that Q3 GDP may be revised lower, while expressing the opinion that it would be some time before unemployment falls before 10%. Fed’s Plosser on the other hand was more confident in the US recovery and less concerned over a double dip risk, though reiterated that now was not the time to raise rates. He added that he doesn't see inflation being an issue in the near term but a risk in the longer term. Plosser is noted as one of the more hawkish members of the board at present and combined with Fisher's remarks suggests there is no urgency to tighten US rates. Both certainly appear not worried over inflation being an immediate threat.
The pending long weekend in Tokyo, and the US holiday later next week, gave Asia little incentive to trade during their session. The only excitement came when the BOJ left rates unchanged with a unanimous decision, which was widely expected, but again upgraded its assessment of the Japanese economy to a “pickup” in activity rather than a recovery. Otherwise, the BOJ announced it was keeping its very easy monetary conditions as it acknowledged there were still risks to the downside, even though they were diminishing slightly. On the inflation front, it kept its view on core inflation unchanged though expected the pace of falls to slow as higher oil prices influence.
Data releases for today are limited to German PPI during the European session while speeches from ECB’s Weber and Trichet may hit the wires. There is nothing slated for the North American session so it just remains for us to wish you a pleasant weekend.