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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 21 November 2012 at 4:10 GMT

Asia Today: EUR plays ping-pong on Eurogroup meeting headlines

Market Analyst
Singapore

Asian markets were steady with tomorrow’s US Thanksgiving holiday providing players with the excuse to sit back. We did see some volatility midway thought the session on Eurogroup headlines.

EURUSD was trading quietly with a slightly softer bias as we awaited news from the Eurogroup meeting on Greece. Just before lunch, a Bloomberg headline reporting that EU finance chiefs had reached a decision caused a 20 point spike in EURUSD but only to be reversed when Reuters subsequently reported that German finance minister said that no agreement had been reached and they will meet again on Monday. This saw EURUSD trading to the session’s lows. EU’s Juncker later sat in the middle saying that “some progress” on a package of steps to cut Greek debt had been made.

On the data front we saw Japan’s trade data for October which was again disappointing reading. Exports fell on an annual basis for the fifth straight month but at a slightly slower pace of -6.5 percent compared with the -10.3 percent seen in September. The Japan/China island dispute continues to weigh on exports with those to China falling 11.6 percent on-year following a 14.1 percent y/y decline last month. Slower demand from Europe saw those exports down 20.1 percent on-year. Increased exports to the US were not enough to make up the gap. Imports were slower on reduced fuel demand, falling 1.6 percent y/y.

The trade balance was worse than expected though narrowed marginally to ¥549.0 bln from ¥561.7 bln. JPY extended its weaker path throughout the session with the next psychological USDJPY level at 82.0 within touching distance.

There was a relative calm in currency markets overnight, though EURUSD did manage to improve on its previous high by 9 points. All eyes were on the Eurogroup meeting though headlines failed to emerge. USDJPY again outperformed, shrugging off the no-change announcement from the BOJ yesterday. SEK weakened as S&P warned that the economy is slowing faster than expected.

US data was limited to a stronger housing starts print, rising 3.6 percent m/m to 894k units while building permits were marginally better than forecast at -2.7 percent versus -2.9 percent following last month’s hefty 11.1 percent jump. Bernanke warned that the Fed would not be able to offset the negative growth implications if the US economy goes over the fiscal cliff (which poses a “substantial” threat). However, solving the cliff issue could make 2013 “a very good year”. Wall Street was mixed with volumes low as we head towards the Thanksgiving holiday: DJIA closed -0.06 percent, S&P +0.07 percent and the Nasdaq +0.02 percent.

Data Highlights

  • CA Sep. Wholesale Sales out at -1.4% m/m vs. +0.5% expected and revised +0.3% prior
  • US Oct. Housing Starts out at +3.6% m/m vs. -3.7% expected and revised +15.1% prior
  • US Oct. Building Permits out at -2.7% m/m vs. -2.9% expected and revised +11.1% prior
  • AU Sep. Westpac Leading Index out at +0.7% m/m vs. revised +0.4% prior
  • JP Oct. Merch. Trade Balance out at -¥549.0 bln vs. -¥360.0 bln expected and revised -¥561.7 bln prior
  • JP Oct. Trade Exports out at -6.5% y/y vs. -4.9% expected and -10.3% prior
  • JP Oct. Trade Imports out at -1.6% y/y vs. -3.2% expected and +4.1% prior
  • AU Oct. DEWR Internet Skilled Vacancies out at -2.5% m/m vs. revised -2.8% prior
  • NZ Oct. Credit Card Spending out at +0.3% m/m, -0.9% y/y vs. +1.0%/+1.5% prior resp.

Upcoming Economic Calendar Highlights

(All Times GMT)

  • Swiss M3 Money Supply (0800)
  • Norway Unemployment Rate (0900)
  • UK BOE Minutes (0930)
  • UK Public Finances (0930)
  • US MBA Mortgage Applications (1200)
  • US Initial Jobless Claims (1330)
  • US Markit US PMI Preliminary (1358)
  • CA Teranet/National Bank House Prices (1400)
  • UK BOE’s Weale to speak (1430)
  • US Bloomberg Consumer Comfort Index (1445)
  • US Bloomberg Economic Expectations Index (1445)
  • US Michigan Confidence – Final (1455)
  • US Leading Indicators (1500)

For more information on today’s events, please visit the financial calendar

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