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월요일, 12월 11, 2017

Sverre Holbek, Senior Analyst at Danske Bank, suggests that they think that ECB’s QE composition could also factor in the discussions at the December

Sverre Holbek, Senior Analyst at Danske Bank, suggests that they think that ECB’s QE composition could also factor in the discussions at the December meeting.Key Quotes“The October ECB Minutes stated that ‘the purchase volumes under the three private sector purchase programmes would remain sizeable and the private sector programmes would not be adjusted in strict proportion to the overall scaling-down of the APP’.” “In our view, this suggests that the corporate bond and covered bond purchase programmes’ (CSPP and CBPP3, respectively) share of total net purchases will be increased from January 2018. The ABS purchase programme has played only a minor role due to the lack of eligible assets.” “In our view, CSPP is likely to account for the bulk of private sector purchases, given that the ECB’s ownership rate is lower within the corporate market. However, the ECB is also likely to remain active in the covered bond market, particularly in the primary market. Furthermore, purchase flows will also be supported by redemptions, with EUR1.6bn of covered bonds maturing per month on average from January through to end-September 2018.”

Viraj Patel, Foreign Exchange Strategist at ING, suggests that it will be interesting to see whether the Bank of England explicitly acknowledges the l

Viraj Patel, Foreign Exchange Strategist at ING, suggests that it will be interesting to see whether the Bank of England explicitly acknowledges the latest constructive developments in Brexit talks when they meet this week.Key Quotes“If so, one could see this as a hawkish development – with risks that GBP/USD moves up to 1.35-1.36 on a steeper UK rate curve.” “Non-event' BoE meeting may have a subtle hawkish surprise...While Season 1 of the show 'Solving Brexit' ended last week with UK and EU officials striking a divorce deal at the 12th hour, there are still plenty of exciting spin-off shows for GBP markets to tune into this week. In terms of ratifying the Brexit divorce deal, the EU Leaders Summit (Thu) should pretty much be a formality - or a post-season wrap-up party as one might say. Although we do note that, like with most parties, things may not be as plain-sailing or virtuous as one may have initially planned for - and this could well see the pound retain its 'trashy' status for now. Despite this Brexit noise, the Bank of England meeting (Thu) is probably now the standout event for GBP markets this week - especially in light of recent developments. While one would expect the post-meeting statement to remain largely unchanged, it will be interesting to see whether the MPC explicitly acknowledge the recent Brexit progress up front in their comms. Coupled with greater clarity over the role of Brexit negotiations in the Bank's policy reaction function, a constructive tone over the recent divorce deal could be seen as a hawkish development. Two things may prevent Bank officials - and potentially markets - from making this hawkish leap of faith just yet: 1.    A transition deal still needs to be agreed in principle and this is what has greater economic significance for the BoE's near-term outlook 2.    The evolution of key economic data over the next few months matters more for the timing of the next rate hike On the latter, this week's UK data splurge - which sees CPI (Tue), jobs and wage growth data (Wed) and retail sales (Thu) - will be worth keeping an eye. The combination of rising underlying inflationary pressures (higher core CPI and wages) and solid UK consumer activity would be the perfect release for BoE hawks.”  “Bottom line: Risk-reward supports the case for GBP upsideThe focus is now on finding an economic catalyst for a positive re-pricing of BoE policy rate expectations. We identify two that are not necessarily mutually exclusive - Brexit progress and positive UK data surprises. With markets not pricing in a BoE rate hike until 4Q18 - and the UK curve looking pretty flat still - we think there is a good chance of any hawkish BoE commentary propelling GBP/USD up towards the 1.35-1.36 area this week. At the very least, we expect the pound to be supported now that the tail risk of a 'no deal' has been taken off the table. Risk-reward supports the case for GBP upside - and staying wary of a potential hawkish BoE surprise this week.”  

The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, is fluctuating in a narrow range below the 94 mark on Mo

DXY struggles to find direction on Monday. Investors are unlikely to commit to large positions ahead of Wednesday FOMC meeting. The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, is fluctuating in a narrow range below the 94 mark on Monday amid a lack of fresh fundamental drivers that could impact the price action. On Friday, the data from the United States showed that the total nonfarm payroll employment increased by 228,000 in November, beating the market expectation of 200,000. Although the DXY refreshed its multi-week high above the 94 handle with the initial reaction to the data, it failed to extend its gains and closed the week at 93.87. A softer-than-expected wage inflation data didn't allow investors to add to their bullish positions especially with the Federal Reserve's last meeting of the year looming. On Wednesday, the Fed is widely expected to announce a 25 bps rate hike. However, markets will be paying close attention to the updated 'dot plot' that shows the rate hike projections of individual FOMC members. If Wednesday's meeting convinces markets that the Fed is looking to hike rates three more times rather than two in 2018, the DXY could gain traction and stage a bullish rally before the end of the year.USD: Expect the classic ‘buy the rumour, sell the fact’ FOMC rate hike moves - INGTechnical levels to considerThe index is likely to stay in its recent range on Monday and Tuesday. The initial resistance could be encountered at 94.05 (last week's high) followed by 94.55 (Nov. 11 high) and 95 (psychological level). On the flip side, supports align at 93.50 (Dec. 7 low), 93 (psychological level) and 92.40 (Nov. 27 low).

Aila Mihr, Analyst at Danske Bank, notes that recent remarks from ECB members have repeatedly hinted at a preference for the October QE extension to b

Aila Mihr, Analyst at Danske Bank, notes that recent remarks from ECB members have repeatedly hinted at a preference for the October QE extension to be the last one.Key Quotes“Yves Mersch: ‘Market would be wrong to expect another QE extension’; ‘CB toolbox not limited to asset purchases’.” “François Villeroy de Galhau: ‘There shouldn’t be excessive focus on the net QE purchases.’” “Benoît Cœuré: ‘I hope that asset purchases will end in September’ The minutes from the October meeting also revealed that ‘several members’ favoured decoupling the forward guidance on QE from the requirement for a sustained rise in inflation, instead linking it to the overall monetary policy stance, i.e. the combination of new asset purchases, the existing stock of QE assets plus reinvestments and the forward guidance on policy rates. If this view were to become more prominent in the Governing Council over coming months, it would open up the possibility of the ECB ending the QE programme in 2018, even without a clear pickup in inflation.” “Markets are so far still very complacent, pricing in the first ECB 10bp hike not before July 2019. Hence, further hawkish comments in coming months hinting at the possibility the ECB could phase out QE purchases earlier than markets are currently looking/wishing for could be a trigger for a reassessment of current market expectations.”

It’s an action-packed week for global markets with a deluge of G20 central bank meetings and key economic data releases to contemplate ahead of the fe

It’s an action-packed week for global markets with a deluge of G20 central bank meetings and key economic data releases to contemplate ahead of the festive holidays, but none more bigger than the Dec FOMC meeting (Wed) – where officials  are set to increase rates by 25bp, suggests Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“With this fully priced in, markets will be more fixated on gauging the Fed’s future policy path. There are 2 factors to consider:Persistently low US inflation dynamics. The Nov FOMC minutes highlighted the fact that Fed officials are currently scratching their heads when it comes to explaining the lack of inflation in the US economy. A flattened or dormant Phillips Curves was one of several reasons listed and the disappointing wage growth readings in the latest jobs report will have only compounded such concerns. We do not think markets are mispricing US inflation risks per se; banking on a dormant Phillips Curve relationship to suddenly ‘wake up’ has proven to be an unprofitable strategy for investors of late. Moreover, any US inflation ‘shock’ is unlikely to transpire overnight – there will be plenty of time for markets to adjust to any signs of brewing underlying inflationary pressures. For now, such signs remain few and far between – and trackers of long-run US inflation expectations (like the 5Y5Y breakevens) are right to be pricing in structurally lower price dynamics. It’s a tall order for the median Fed dots to shift lower, but we may see a slight downshift in the distribution.The impact of fiscal stimulus on the Fed’s economic outlook. Odds of the Trump Tax Bill being passed have increased since the Sep FOMC projections and it will be interesting to see whether officials will incorporate any fiscal stimulus into their forecasts. We think it is too early for this, while some Fed officials have also downplayed the reflationary effects of proposed policies.” “We expect to see the classic ‘buy the rumour, sell the fact’ type of USD reaction around the FOMC meeting this week – and see greater downside risks given the prospects of greater dovish tones emerging. DXY to fall back below the 93 level.”

The ECB is increasingly shifting focus towards a more holistic view of the euro area economy and inflation, with a strong belief that the closing outp

The ECB is increasingly shifting focus towards a more holistic view of the euro area economy and inflation, with a strong belief that the closing output gap in light of ongoing expansion and continued employment gains will eventually push underlying inflation pressures higher, according to Aila Mihr, Analyst at Danske Bank.Key Quotes“In line with this thinking, the so-called ‘super core’ inflation measure has increasingly featured in recent speeches by ECB members. Super core consists of a sub-index of all HICP items that have been closely correlated with the output gap in the past and could hence provide important signals about turning points in inflation.” “The ECB does not publish the series but using the ECB’s methodology we have tried to replicate it (see also Euro Area Research – ECB inflation gap persists in 2019, 4 December).” “Both our and the ECB’s super core inflation measures indicate an upward trend since 2017.” “Should this increasing trend continue, it would support the ECB’s argumentation of a pickup in underlying inflation pressures, providing it with a good ‘excuse’to end the QE programme in 2018.”

While Season 1 of the show 'Solving Brexit' ended last week with the UK and EU striking a divorce deal at the 12th hour, there are still plenty of exc

While Season 1 of the show 'Solving Brexit' ended last week with the UK and EU striking a divorce deal at the 12th hour, there are still plenty of exciting spin-off shows for GBP markets to tune into this week, according to Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“In terms of ratifying the Brexit divorce deal, the EU Leaders Summit (Thu) should pretty much be a formality – or a post-season wrap-up party as one might say. Instead, the Bank of England meeting (Thu) is probably now the standout event this week; while we suspect the statement will be largely unchanged, it’ll be interesting to see whether the MPC explicitly acknowledge the recent Brexit progress. If so, one could see this as a hawkish development – with risks GBP/USD moves up to 1.3500/50.”

After gaining as much as $1 on Friday, the barrel of West Texas Intermediate retraced some of its daily gains after the Baker Hughes report from the U

OPEC signals to a possible end of output cut deal in June. Shale production in the U.S. is set to increase. WTI fluctuates in a narrow band on Monday. After gaining as much as $1 on Friday, the barrel of West Texas Intermediate retraced some of its daily gains after the Baker Hughes report from the United States and recorded a $1 for the week. The barrel of WTI started the new week in a calm manner and was last seen trading at $57.20, down 0.28% on the day.  Earlier in the day, remarks from OPEC officials brought a modest selling pressure on crude oil prices. Speaking to Bloomberg following the annual meeting of the Organization of Arab Petroleum Exporting Countries on Sunday, Kuwait’s Oil Minister Issam Almarzooq said that OPEC and its global allies including Russia may end their production cuts before 2019 if the crude market re-balances by June. Moreover, the UAE Energy Minister Suhail Al Mazroui also crossed the news wires, noting that OPEC and non-OPEC producers would develop an exit strategy. Following those above comments, the barrel of WTI eased below the $57 handle but was able to stage a modest recovery. Later this week, investors will be closely following the API's and EIA's weekly crude oil reports from the United States. Last Friday, Baker Hughes Inc. announced that drillers in the U.S. added two more rigs last week, lifting the total number of active rigs to its highest level since September at 751. Any further signs of the shale output increasing in the U.S. could continue to weigh on crude oil prices.Technical outlookThe barrel of WTI could face the initial hurdle at $57.80 (Dec. 8 high) ahead of $58.35 (Dec. 4 high) and $59.05 (Nov. 24 high). On the flip downside, supports align at $55.80 (Dec. 7 low), $55 (psychological level) and $54.40 (Nov. 3 low).

The Aussie bulls are seen looking vigor after the solid comeback from near half-yearly lows, leaving AUD/USD in a brief phase on consolidation near 0.

Weaker Chinese CPI and oil prices weigh. Bulls continue to guard 0.7500 barrier. US data eyed. The Aussie bulls are seen looking vigor after the solid comeback from near half-yearly lows, leaving AUD/USD in a brief phase on consolidation near 0.7525 levels.AUD/USD: Firmer DXY weighsThe stalled upmove seen in the spot can be mainly attributed to the persisting weakness seen in copper and oil prices, while cautious trading witnessed on the European equities also keeps the upside in check on the higher-yielding currency, the AUD.  Also, the AUD bulls remain somewhat weighed down by downbeat Chinese CPI data released last Sunday. However, the major continues to derive support from the weaker tone seen around the US dollar across its main competitors, especially after US wage growth numbers disappointed, while repositioning ahead of the FOMC outcome could be also one of the catalysts behind the AUD/USD recovery from 0.7500 levels. Later today, the US JOLTS job openings data will fill in an otherwise quiet US docket, as the focus shifts towards the Aus HPI and NAB business confidence data due out tomorrow morning.AUD/USD Preferred StrategyAccording to RoboForex Team, “The AUD/USD pair is trading at 0.7525; the instrument is still moving below Ichimoku Cloud, which means that it may continue falling. We should expect the price to test Tenkan-Sen and Kijun-Sen at 0.7530 and then continue moving downwards to reach 0.7430. However, the scenario that Implies further decline may be canceled if the price breaks the upside border of the cloud and fixes above 0.7580. In this case, the pair may continue growing towards 0.7660.”

Greece Industrial Production (YoY) fell from previous 2.4% to 0.5% in October

Viraj Patel, Foreign Exchange Strategist at ING, suggests that there is a small matter of the Dec ECB meeting to deal with (Thu), which should be a no

Viraj Patel, Foreign Exchange Strategist at ING, suggests that there is a small matter of the Dec ECB meeting to deal with (Thu), which should be a non-event for the EUR – especially as the QE taper plans have now been unveiled.Key Quotes“Some attention may be paid to the ECB's longer-run forecasts (which will include the 2020 outlook). But we note that the next big thing will be the moment when markets start to position for higher ECB deposit rates; this is not priced in yet, but for us is a summer 2018 story that takes EUR/USD to 1.25.”

While presenting the Austrian Financial Stability Report on Monday, the ECB Governing Council member and Austrian Central Bank Head, Ewald Nowotny, sa

While presenting the Austrian Financial Stability Report on Monday, the ECB Governing Council member and Austrian Central Bank Head, Ewald Nowotny, said that the ECB must be careful in unwinding low-interest rates. Meanwhile, the EUR/USD pair extends its advance to test 1.18 handle, now trading near daily tops of 1.1797, up +0.15% on the day.

Livesquawk reports comments from the UK’s Brexit Secretary David Davis, as under: Certain can avoid hard border with Ireland whatever outcome of Brex

Livesquawk reports comments from the UK’s Brexit Secretary David Davis, as under: Certain can avoid hard border with Ireland whatever outcome of Brexit trade talks. All sorts of possibilities for a frictionless border with Ireland. Withdrawal agreement payment dependent on a whole deal being sorted out.

Karen Jones, Head of FICC Technical Analysis at Commerzbank, says the upside bias remains intact as long as the pair holds above the last week's low o

Karen Jones, Head of FICC Technical Analysis at Commerzbank, says the upside bias remains intact as long as the pair holds above the last week's low of 1.3320. Key quotesGBP/USD last week we saw the market sell-off to and recover from its 20-day ma at 1.3341, for now, there remains an upside bias above last weeks low at 1.3320. It has recently broken above the 2014-2017 downtrend and this has introduced scope to the 1.3658/71 September high and double Fibonacci retracement. Below 1.3320 should be enough to alleviate immediate upside pressure and allow for weakness back to the 1.3157 2016-2017 uptrend. Where are we wrong? The 1.3157 2014-17 uptrend represents the breakdown point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement. Short-Term Trend (1-3 weeks): The 2014-2017 downtrend line has been eroded to target the 1.3658/71 double Fibo. Long-term trend (1-3 months): A close below the 1.3157 uptrend will be viewed very negatively.

In view of Aila Mihr, Analyst at Danske Bank, strong economic data in recent months and comments from ECB members point to an upward revision of the E

In view of Aila Mihr, Analyst at Danske Bank, strong economic data in recent months and comments from ECB members point to an upward revision of the ECB’s GDP forecast.Key Quotes“Jens Weidmann: ‘Evidence is mounting the economic outlook will be at least as good as previously forecast, if not even better.’” “Yves Mersch: ‘No-one would be overly surprised if we would again slightly revise upwards our projections for growth.’” “Inflation: We expect the ECB to revise up its inflation forecast for 2018 due to higher energy price inflation driven by recent higher oil prices. The new 2020 forecast will probably show a further pickup in inflation towards the target, driven by the ECB’s belief in increasing underlying inflation pressures in the light of the continued strong economic momentum and a growing urge in the Governing Council to move ahead with monetary policy normalisation.”

Gold's (XAU/USD) recovery from the 4-1/2 month low of $1243.80 appears to have run out of steam around $1250, seemingly due to caution ahead of the We

Gold has recovered from the 4-1/2 month low. Still, upside capped on caution ahead of the Fed rate decision. Currently, related markets - treasury yields offer no clues. Gold's (XAU/USD) recovery from the 4-1/2 month low of $1243.80 appears to have run out of steam around $1250, seemingly due to caution ahead of the Wednesday's FOMC rate decision. The Fed is widely seen raising rates by 25 basis points (bps) this Wednesday. It appears the investors have already priced-in the move as the 2-year treasury yield (which mimics short-term interest rate expectations) has rallied from 1.254 percent (Sep low) to 1.839 percent (last week). Meanwhile, the metal has dropped sharply from $1300 to $1243.80 over the last two weeks.   Consequently, the yields may drop and the metal may regain bid tone on Wednesday, especially if the Fed dot plot shows downward revision of the interest rate forecasts. Ahead of the Fed, the focus remains on the Treasury yields, which, as of writing it trading flatlined at 1.80 percent.Gold Technical LevelsA break below $1246.89 (session low) would open doors for $1243.80 (Dec. 7 low) and $1236.71 (Jun. 26 low). A move above $1253.35 (resistance on 1-hour) would expose $1255.17 (5-day MA) and $1258 (1-hour 50-MA).  

Reuters reports comments from the Northern Ireland’s Secretary James Brokenshire, as he delivered an interview with RTE Radio. Key Headlines: Last w

Reuters reports comments from the Northern Ireland’s Secretary James Brokenshire, as he delivered an interview with RTE Radio.Key Headlines:Last week’s deal was more than just a statement. Stands behind commitments in Brexit report.

Italy Retail Sales n.s.a (YoY) dipped from previous 3.4% to -2.1% in October

Italy Retail Sales s.a. (MoM) below expectations (-0.1%) in October: Actual (-1%)

South Korea’s Finance Minister, Kim Dong-yeonon, told Reuters on Monday, relevant ministries are in talks to decide whether trading of bitcoins should

South Korea’s Finance Minister, Kim Dong-yeonon, told Reuters on Monday, relevant ministries are in talks to decide whether trading of bitcoins should be regulated.Key Quotes:“We’re looking at its speculative nature, as well as situation in other countries as we review.”

The Bank of Japan (BoJ) came out with a brief statement last minutes, after the review of its benchmark ratio for current account balances kept with t

The Bank of Japan (BoJ) came out with a brief statement last minutes, after the review of its benchmark ratio for current account balances kept with the central bank.Key Points:Benchmark ratio kept at 21.5% (after being increased in September from 20.0%). The negative rate interest rate will be applied to about JPY 10 trillion of funds (a change from the previous JPY 10-20 trillion over the last year).

Karen Jones, Head of FICC Technical Analysis at Commerzbank, sees scope for a near-term rebound and says a close above 0.7645 would alleviate downside

Karen Jones, Head of FICC Technical Analysis at Commerzbank, sees scope for a near-term rebound and says a close above 0.7645 would alleviate downside pressure. Key quotesAUD/USD sold off sharply last week and attention remains on the uptrend, which today is located at .7506. We also note the 13 count on the daily chart and the divergence of the RSI and would allow for a near-term rebound. The market has strong support in this vicinity – namely the 2016-2017 uptrend line and double Fibonacci retracement at .7500-.7475 (50% retracement of the move up from the 2016 low AND the 78.6% retracement of the move seen from May 2017). At this point, only a close above  .7645, last weeks high will alleviate downside pressure. Where are we wrong? Below .7475 would trigger a deeper sell off to the .7330 May low. Short-Term Trend (1-3 weeks): Bouncing from the 2016-2107 uptrend at .7500. Long-term trend (1-3 months): Below the 2016-2017 uptrend would introduce scope to the 2000-2017 support line at .7072.

Karen Jones, Head of FICC Technical Analysis at Commerzbank shows a close below 1.1712 would open doors for the continuation of the recent drop.  Key

Karen Jones, Head of FICC Technical Analysis at Commerzbank shows a close below 1.1712 would open doors for the continuation of the recent drop. Key quotesEUR/USD failed last week at the 78.6% retracement at 1.1976 and came under increasing downside pressure. The 55-day ma has been eroded But we have seen NO close below here (1.1760) and we may see a small rebound, this is indicated to fail circa 1.1810. A close below 1.1712 the recent low should be enough to negate upside pressure and allow for slippage back to the 1.1553 7th November low. Where are we wrong? The Fibonacci retracement at 1.1976 is regarded as the last defense for the 1.2092 September high. Short-term trend (1-3 weeks): Neutralised Long-term trend (1-3 months): Neutral to positive it is possible that the move to 1.1553 as the end of an ‘a-b-c correction then the longer term risk is still on the topside.

The GBP/USD pair failed to take out the 10-day MA level of 1.3430 and fell back below 1.3380 as Irish issue lingers and investors look forward to this

GBP/USD faded spike to 1.3431. Short-term technicals favor the downside. The GBP/USD pair failed to take out the 10-day MA level of 1.3430 and fell back below 1.3380 as Irish issue lingers and investors look forward to this week's Fed and BoE meeting. Kathy Lien from  BK Asset Management writes, "the real issue though continues to be the border with Ireland which there was very little detail other than a pledge to provide specific solutions to address the unique situation of Ireland and a promise that in the absence of a Irish border deal, the UK will maintain full alignment with the single market and customs union."Focus on FedThe USD could remain bid as the Fed is widely expected to hike rates by 25 basis points on Wednesday. However, there is a risk that the greenback could take a hit following the rate hike (sell the fact). Also, the dollar could take a beating of the Fed scales back its hawkish interest rate forward guidance.UK data heavy week, eyes BOE meetingInvestors look forward to a string of UK data - CPI, labor data & wage growth numbers, and retail sales - due later this week. Meanwhile, the Bank of England (BoE) may largely endorse a wait-and-see approach ahead of 2018.GBP/USD Technical LevelsThe spot was last seen trading around 1.3375. A daily close below 1.3354 (38.2% Fib R of Nov. 3 low - Nov. 30 high) would open up downside towards 1.3294 (50% Fib R) and 1.3243 (50-day MA). On the higher side, breach of resistance at 1.34 (zero levels) could yield 1.3430 (10-day MA) and 1.3440 (4-hour 50-MA).    

Austria Trade Balance up to €-267.1M in September from previous €-719.9M

The fact that PM May and EU Commissioner Juncker were able to announce last week that Brexit transition talks can start means that Theresa May’s gover

The fact that PM May and EU Commissioner Juncker were able to announce last week that Brexit transition talks can start means that Theresa May’s government is set to survive at least another week, according to Jane Foley, Senior FX Strategist at Rabobank.  Key Quotes“On Thursday, there were reports from both sides of the channel suggesting that if a compromise could not been announced today that May’s premiership may not survive for more than a few more days.  From the point of view of Brussels this could mean negotiations would have to be continued with a hard line Brexiteer Conservative PM such as Gove of Johnson.  This means that on both sides there was a strong incentive to announce today that sufficient progress had been made on legacy issues and that EU/UK trade talks would be allowed to commence.   However, some clarity regarding the N. Ireland border issue still appears to be missing.”   “All parties involved support the case for no hard border across the island for Ireland in support of the Good Friday Peace Agreement for the region.  At the start of the week an agreement with respect to the region appeared to stall because the Northern Irish Unionist DUP party (upon who the minority UK government relies upon for support) refused to accept a different economic arrangement for N. Ireland to the rest of the UK.  Monday’s deal reportedly would have proposed that N. Ireland could be in effect allowed to remain within the customs unions.  This morning PM May announced that there will neither be a hard border nor will there be any impact to economic integrity across the UK.  However, on the assumption that the UK leaves the single market and customs unions, it is not clear how these two factors will be reconciled.  The implication is that with respect to N. Ireland there is still work to be done. That said, the text of the agreement does state that should the UK and EU fail to agree a final trade deal, the UK will maintain "full alignment" with those rules of the internal market and customs union that help to protect northsouth cooperation in Ireland.” “The fact that the UK government is likely to remain in place in the near-term is a supportive factor for GBP.  Also, the fact that trade talks can finally start is another positive for the pound.  However, with only 15 months to go before the start of Brexit, the market will be under no illusion that the trade talks will be straightforward.  EC President Tusk warned this morning that the “most difficult steps in Brexit lie ahead”.  It remains our view that 2018 could be a rocky ride for the pound with cloudy skies mingled with just a few bright spells remaining our base forecast.”   “In celebration of the fact that the UK has likely avoided a near-term leadership challenge, we have on Friday revised down our EUR/GBP forecast a touch to 0.87 to 0.88.  However, in view of the fact that trade talks are still likely to be rocky and that many questions around the N. Ireland issue remain, we have left our 2018 forecasts for a higher EUR/GBP in place.  That said, while we would not rule out a move towards the EUR/GBP 0.95 area during the course of 2018, we have pencilled in a sharp drop for EUR/GBP on a 15 month view.  This assumes that the politicians do manage to put in place a best case free trade deal, but that it is again of the last minute variety.”

The latest survey of 48 economists by Bloomberg shows a majority of economists expect the European Central Bank (ECB) to hike rates in the second quar

The latest survey of 48 economists by Bloomberg shows a majority of economists expect the European Central Bank (ECB) to hike rates in the second quarter of 2019.Key pointsThe deposit rate could increase to -0.25 percent from current -0.40 percent only in Q2, 2019.  Eurozone to expand 2.1 percent in 2018 and 1.8 percent in 2019.  The probability of a recession over the next year is only 8 percent.     

The US dollar extends its Asian retreat against its Japanese counterpart into early Europe, now on the offers back below the midpoint of 113 handle.

DXY extends post-NFP sell-off The Yen underpinned by strong manufacturing index. Focus shifts to the US CPI, Fed outcome. The US dollar extends its Asian retreat against its Japanese counterpart into early Europe, now on the offers back below the midpoint of 113 handle.USD/JPY off 3-week topsThe spot is seen closely moving in sync with the US dollar index, as subdued Treasury yields across curve continue to undermine the sentiment around the buck. Mixed US labor market report released on Friday weighs down on the US rates, while markets also resort to profit-taking on their USD longs after the recent upsurge heading towards the FOMC decision due later on Thursday. More so, stronger Japanese BSI manufacturing index released earlier in Asia also lends support to the renewed uptick seen in the Yen, pushing USD/JPY further southwards. Japan big manufacturers' mood improves in October-December: Govt surveyLooking ahead, the pair will take cues from the sentiment on the European open ahead of the US JOLTS jobs opening data, as investors brace for the US inflation report and Fed outcome due later in the week ahead.USD/JPY Technical ViewJim Langlands at FX Charts, noted: “With the momentum indicators aligning higher, a test of 113.80 would not surprise, beyond which 114.00/05 will see sellers ahead of a possible towards 114.30 and even 114.75. Look to buy dips towards 113.00/10 with a SL placed sub 112.80.”

In the week ahead, despite the market fully pricing-in a rate hike, analysts at BMO Capital Markets expect that the FOMC meeting will be the main even

In the week ahead, despite the market fully pricing-in a rate hike, analysts at BMO Capital Markets expect that the FOMC meeting will be the main event, followed closely by the November CPI data and Retail Sales.Key Quotes“The Fed is going to deliver another quarter-point of tightening on Wednesday and while that aspect of the FOMC meeting is a foregone conclusion, the open question remains how will the Committee characterize the broader economic and inflation outlook. And let us not forget the updated projections – including the dotplot. We’re not anticipating any significant changes to the Fed’s rate projections, although if anything the better core-CPI prints (i.e. not disappointing in August and October) could bias the 2018 dots a touch higher. That’s more of a risk than a call per se, as we expect Yellen will be content not to rock the boat as she drops the mic on the way to her first-quarter speaking tour.”  “As for the economic data, the inflation reports will be the most relevant and with core-CPI seen increasing +0.2% in November, the yearly pace is expected to remain steady at 1.8%. We’re viewing this week as an important test of the notion that even the return of moderate inflation won’t materially challenge the flattening bias. As a point of clarity, an as-expected or higher core-inflation print will be met by an initial steepening of the curve – that much is intuitive. What remains to be seen is if that marks the beginning of a broader reversal of the recent flattening trend. This is of particular interest to us because our yield forecast for next year is based on the assumption that the market is entering a traditional mid-cycle trading pattern in response to increases in yearover-year inflation gains.”  “The essence of the question comes down to whether or not more realized inflation is viewed as enhancing the Fed’s credibility (i.e. Yellen was right to get in front of the data). In prior mid-tightening cycles, that has led to underperformance of the front-end of the curve and exacerbated any flattening trend that was already established.  This differs from the curve’s response when the Fed is actively easing or policy is on-hold, hence why we’ll be so eager to see how the market reacts to a solid core-inflation print and a Fed hike on the same day. We’re clearly biased to see the 2- to 5-year sector selloff more quickly than 10s and 30s, but we’re cognizant that there are many leaning the other direction on this as evidenced by the significant short-base in the ultra-long futures contract.”

Following the decision to extend the QE programme for another nine months in 2018, analysts at Danske Bank do not expect the ECB to make any changes t

Following the decision to extend the QE programme for another nine months in 2018, analysts at Danske Bank do not expect the ECB to make any changes to its policy stance at its upcoming meeting.Key Quotes“We think policymakers will put off any substantial discussion about the next move or changes to the forward guidance until well into 2018.” “Activity indicators have remained strong and we expect the ECB to revise its growth and inflation forecasts upward in light of the ongoing strong economic momentum.” “Consensus seems to be growing in the Governing Council that the October QE extension was the last one, as the ECB is increasingly shifting towards a more holistic view of the economy and inflation. Based on this, we think it is important to watch developments in ‘super core’ inflation.” “Other topics that could come up during the Q&A include the recent volatility in the Eonia fixing and the repo market over year end.” “We think it is likely that the corporate bond and covered bond purchase programmes’ share of QE will be increased from January 2018.” “In our view, it is too early for the ECB to spur the next ‘wave of normalisation’ pricing just yet, so we project EUR/USD within a 1.17-1.20 range near term.” “We expect the trend for tighter spreads and flatter curves in the euro fixed income market to continue.”

A Japanese Cabinet Official was on the wires earlier today, via Reuters, noting that he expects the Trans-Pacific Partnership agreement to get signed

A Japanese Cabinet Official was on the wires earlier today, via Reuters, noting that he expects the Trans-Pacific Partnership agreement to get signed before the Japan-EU Free Trade Agreement (FTA).

The FOMC is widely expected to raise policy rates 25 bps this week, for the third time this year and fifth time since rate hikes started two years ago

The FOMC is widely expected to raise policy rates 25 bps this week, for the third time this year and fifth time since rate hikes started two years ago, according to Michael Gregory, Deputy Chief Economist at BMO Capital Markets.Key Quotes“The market is pegging the odds (at least) at 92%. And, all eyes will be on the statement, Summary of Economic Projections (SEP) and Chair Yellen’s swan-song press conference for clues to Fed policy in 2018.” “In the statement, we don’t anticipate much change to the overall economic assessment. The previous verbiage that the “labor market has continued to strengthen and that economic activity has been rising at a solid rate” remains as valid as before. However, the recent stabilization and slight turn up in measured inflation might get mentioned. We expect no mention of the tax cut legislation currently making its way through Congress (although this will likely show up in the subsequent Minutes). Minneapolis President Kashkari might dissent, as he did for the June rate hike.” “In the SEP, we’ll likely get some technical tweaks to the economic projections for 2017, given actual data and the proximity to year-end. Where we could see more meaningful shifts is in the unemployment rate. With the jobless rate currently at 4.1% (it sat at 4.4% last SEP), the 2018, 2019 and 2020 median calls for 4.1%, 4.1% and 4.2%, respectively, could be ratcheted down, as could the 4.6% longer-run level. The median call for the fed funds rate looks locked-in for next year (2.125%) given the frequency of forecasts (6 participants). But there could be a tiny shift to 2019, which is currently sitting in between 2.625% and 2.750%. New Fed Vice-Chair for Supervision Randall Quarles gets to cast his first dot.” “Finally, in the presser, we don’t think Chair Yellen will say anything she hasn’t said before, keeping to the tone of her recent (November 29) appearance before the Joint Economic Committee. No doubt she’ll be asked by the media about a potential Fed reaction to a $1.4 trillion net tax cut. Her answer will be coy. But, with the output gap now closed and the economy essentially at full employment, with household spending and business fixed investment already growing decently (particularly the latter), and with inflation finally showing signs of turning up again, we suspect she’ll be biting her tongue to avoid saying what she really thinks. On balance, we’re not expecting many clues to next year.”

The EUR/USD pair extends its gradual pace of increase in the early European trading, now looking to regain 1.18 handle amid persisting weakness in the

Headed to 100-DMA at 1.1808. Eyes on US-German yield spread. ECB/ Fed meeting in focus. The EUR/USD pair extends its gradual pace of increase in the early European trading, now looking to regain 1.18 handle amid persisting weakness in the US dollar against its major peers.   The offered tone around the US dollar picked-up pace, as the European traders hit their desks and reacted negatively to the weak wage growth numbers seen in Friday’s US jobs report. Hence, the greenback accelerated declines across the board and hit fresh two-day lows of 93.76, extending its retreat from pre-NFP two-week tops of 94.08 levels. However, further gains appear limited as the US-Germany yield spread remains supportive of the US dollar ahead of the Fed and ECB monetary policy decisions due later this week. Therefore, markets could adopt ‘Sell the rallies” strategy, while a drop on a hawkish Fed and dovish ECB outcome could be seen as a good buying opportunity in EUR/USD. Ahead of the central banks’ meetings, the German ZEW economic surveys and US inflation numbers will be looked forward to for fresh trading impetus.EUR/USD Preferred StrategyJim Langlands at FX Charts notes: “The short-term momentum indicators look mixed at the start of the week and I remain fairly neutral although the daily charts do appear to be turning a little lower and maybe hinting of further dollar strength ahead. With no major data, look to trade 1.1740/1.1800 today.”Key Technical LevelsResistance Support  1.1877 4 Dec high 1.1755 Daily Kijun 1.1847 6 Dec high 1.1730 Friday low 1.1814 7 Dec high 1.1707 (61.8% of 1.1553/1.1943) 1.1800 100 DMA 1.1685 Rising trend support 1.1775 Friday high/55 DMA 1.1650 (76.4% of 1.1553/1.1943)  

After four years of depreciation, Asian currencies put in a much stronger performance in 2017, points out the research team at ANZ. Key Quotes “Our

After four years of depreciation, Asian currencies put in a much stronger performance in 2017, points out the research team at ANZ.Key Quotes“Our Asian currency index shows a gain of almost 6% year-todate against the USD. The KRW was the strongest performer with a 10.6% appreciation, while the PHP was the worst with a loss of 2% due to a weakening external position. The unwinding of the Trump trade, a strong export recovery in Asia and strong investor risk appetite were behind Asian currency gains this year. China’s move to keep the RMB stable also helped to provide an anchor for the region.” “How Asian currencies fare in 2018 depends on which of these two contrasting forces will dominate: (i) the effects of policy normalisation in the major advanced economies on global liquidity and ultimately on portfolio flows to Asia; and (ii) a strengthening and broadening in Asian economic growth with export recovery spilling over into domestic demand. We see growth winning out in the end, though the currency moves in the region will be more diffused with growth sensitive currencies outperforming, while high yielding currencies and those with external deficits underperforming.”

Turkey Current Account Balance above expectations ($-4.1B) in October: Actual ($-3.827B)

Norway Producer Price Index (YoY) rose from previous 9% to 9.7% in November

Norway Core Inflation (MoM) below forecasts (0%) in November: Actual (-0.3%)

Norway Consumer Price Index (MoM) came in at 0.1% below forecasts (0.2%) in November

Norway Consumer Price Index (YoY) below forecasts (1.2%) in November: Actual (1.1%)

Norway Core Inflation (YoY) came in at 1% below forecasts (1.2%) in November

Turkey Quarterly Gross Domestic Product registered at 11.1% above expectations (10%) in 3Q

Denmark Inflation (HICP) (YoY) came in at 1.3%, below expectations (1.5%) in November

Denmark Trade Balance declined to 6.6B in October from previous 7.8B

Denmark Current Account fell from previous 16.3B to 14.8B in October

Denmark Consumer Price Index (YoY) below expectations (1.5%) in November: Actual (1.3%)

FX option expiries for Dec 11 NY cut at 10:00 Eastern Time, via DTCC, can be found below. EUR/USD: $1.1640(E518mn), $1.1700(E980mn), $1.1800(E1.02bn)

FX option expiries for Dec 11 NY cut at 10:00 Eastern Time, via DTCC, can be found below. EUR/USD: $1.1640(E518mn), $1.1700(E980mn), $1.1800(E1.02bn), $1.1900(E606mn), $1.1950(E372mn), $1.200(E505mn) USD/JPY: Y111.95-112.00($881mn), Y113.00-10($1.06bn), Y113.20($371mn), Y113.40($345mn) USD/CHF: Chf0.9900($465mn), Chf0.9940($275mn), Chf1.0200($540mn) AUD/USD: $0.7550(A$214mn), $0.7610-15(A$340mn), $0.7790(A$295mn) NZD/USD: $0.6790(N$300mn), $0.6915(N$208mn), $0.6950-51(N$328mn) USD/CAD: C$1.2900($580mn) EUR/JPY: Y133.25(E660mn) EUR/GBP: Gbp0.8820(E280mn) AUD/NZD: N$1.1000(A$252mn): AUD/JPY: Y83.85(A$282mn), Y88.45(A$404mn)

Bitcoin, (BTC/USD) the world’s most traded cryptocurrency, extended its recovery from yesterday’s dip to near $ 12,750 levels and reached as high as $

Bitcoin, (BTC/USD) the world’s most traded cryptocurrency, extended its recovery from yesterday’s dip to near $ 12,750 levels and reached as high as $ 16,580, after Bitcoin futures rallied hard and surpassed the $ 18k mark, following its closely-watch launch on Sunday. Reuters reports, “the most-traded contract on the Chicago-based CBOE Global Markets exchange opened at $15,460 in New York on Sunday evening, before leaping to a high of $18,700 - a gain of 21 percent.”  As of writing, BTC/USD on Bitfinex is up +9% and trade near $ 16,330. The sentiment also remains underpinned by the comments from Yuzo Kano, bitFlyer’s chief executive, delivered in an interview with FT. Kano said trading on the exchange was “roughly 50-50” between existing investors and new money coming in. “The scale of deposits is steadily increasing. It’s pretty large,” he said. BitFlyer, which ranks third for trading in the underlying digital currency, has also won authorization to open in the US.  Moreover, the latest announcement by Goldman Sachs Spokeswoman, as saying that the US banking giant is planning to clear Bitcoin futures for some clients, also continued to offer some support to the prices. Meanwhile, Bitcoin sits at the market capitalization of $ 278.40 billion, down from about $ 285 bn seen last Friday.The total market capitalization of the cryptocurrencies sits at $ 440 billion.

In view of Benjamin Reitzes, Canadian Rates & Macro Strategist at BMO Capital Markets, last week’s Bank of Canada policy statement was a bit more dovi

In view of Benjamin Reitzes, Canadian Rates & Macro Strategist at BMO Capital Markets, last week’s Bank of Canada policy statement was a bit more dovish than expected.Key Quotes“The blowout November jobs report drove some expectation that the Bank might sound a bit more hawkish, but they did not deliver. Indeed, the statement noted that there’s still slack in the labour market, even if it’s diminishing. Historically, the jobless rate at 5.9% and wages accelerating was a sign that there isn’t much, if any, slack in the labour market. However, the BoC has recently focused on their Labour Market Indicator (LMI) which is still showing room to run on the jobs front. In addition, the statement repeated that policymakers will be “cautious” in raising rates.” “While the market focus was on those two points, the rest of the statement was generally upbeat. The discussion of the global economy was positive, though uncertainties around trade and geopolitics were noted. On the domestic economy, the language was nearly all upbeat. The only negative point was that exports were quite weak in Q3, though a rebound is expected in Q4. It was also noted that “housing has continued to moderate, as expected” but that’s likely a positive as there were earlier concerns of overheating. Even the inflation section was encouraging, with the move higher in core CPI “reflecting the continued absorption of economic slack.” “While the market interpreted the statement as dovish, cutting the odds of a January hike, it’s unlikely that Governor Poloz (who does not believe in forward guidance) would want to entirely shut the door to a move at the next meeting. What if the jobless rate falls again next month and wages pick up further? That would strongly suggest that the slack noted in the statement is diminishing in an awful hurry, putting the BoC in a bit of a bind if January is talked down too far. We’ll hear from Governor Poloz this week. Look for him to remain cautious given the uncertainties, but in no way more dovish than the statement.” “Key Takeaway: Last week’s policy statement was relatively upbeat even as the market focused on the more cautious aspects. While a January hike looks unlikely at present, the BoC hasn’t shut the door entirely; expect Governor Poloz’s speech next week to reflect as much. Given the positive aspects of the statement, we remain comfortable with our call for the next rate hike to come in March.”

The UAE Energy Minister Suhail Al Mazroui was on the wires last minutes, via Reuters, noting that the “OPEC and non-OPEC plan to announce an exit stra

The UAE Energy Minister Suhail Al Mazroui was on the wires last minutes, via Reuters, noting that the “OPEC and non-OPEC plan to announce an exit strategy from supply cuts in June, but does not mean we will exit in June”.

Japan Machine Tool Orders (YoY) fell from previous 49.9% to 46.9% in November

The Kiwi was the big mover/ gainer in Asia, kicking-off the week on solid footing on the announcement of the new RBNZ Governor – Orr. Its OZ neighbor

The Kiwi was the big mover/ gainer in Asia, kicking-off the week on solid footing on the announcement of the new RBNZ Governor – Orr. Its OZ neighbor followed suit and gained 0.20% to trade near 0.7525 levels, having ignored poor Chinese CPI data. Meanwhile, both the EUR and GBP remained better bid amid NFP-led broad-based US dollar weakness. The Yen was on offers amid positive Asian equities, with moderate risk-on prevalent across the financial markets.Main topics in AsiaCBOE Bitcoin futures launch this Sunday The Bitcoin market is about to hit yet another milestone this Sunday when the CBOE launches the first Bitcoin futures contract. Japan big manufacturers' mood improves in October-December: Govt survey The business survey index (BSI) of sentiment at large manufacturers stood at plus 9.7, up from plus 9.4 in July-September. BOJ to cut ETF purchases - Bloomberg The Bank of Japan (BOJ) cut its annual buying target for domestic exchange-traded funds (ETF) by as much as a third from the current JPY 6 trillion says a Bloomberg report released today. NZIER Consensus Forecasts shows softer growth outlook for New Zealand NZIER survey of economists shows expectations of slower growth for the next few years in New Zealand. RBNZ’s Spencer: Bitcoin ‘looks remarkably like a bubble forming to me’ The Reserve Bank of New Zealand (RBNZ) Governor Grant Spencer said in an interview with TVNZ broadcast on Sunday, Bitcoin is a bubble. NZ Govt appoints Adrian Orr as the new RBNZ Governor Reuters reporting the latest headlines citing that the New Zealand government appointed Adrian Orr as the new Reserve Bank of New Zealand (RBNZ) Governor.Key Focus aheadJust like the Asian session, the European session also has nothing of note to report, in terms of the macroeconomic releases, with the traders poised for a quiet start to an eventful week ahead. Meanwhile, the US docket offers the second-liner JOLTS job openings data, as the dust settles over the payrolls aftermath. EUR/USD - Bullish doji reversal? Friday's doji candle on the EUR/USD and the failure on the part of the bears to keep the spot below 50-day MA signals the bearish move from the recent high of 1.1961 may have run out of steam. GBP/USD: Further downside in play ahead of a Big week? The rebound in the GBP/USD pair lost legs just ahead of 1.34 handle, with the bulls now on the defensive awaiting fresh impetus from the plenty of risk events lined up in the week ahead. Source: US President Trump to speak on tax this Wednesday -BBG Bloomberg quoted a person familiar with the matter, as citing that the US President Donald Trump will deliver closing arguments for the proposed Republican tax plan on Wednesday. ‘FOMC almost certain to deliver the third rate hike of 2017’ – Goldman Sachs Goldman Sachs’ Analysts came out with a brief preview on their expectations on the final FOMC meeting of this year, with a rate hike widely priced-in by the markets. ‘Short-term pain seen for gold’ - UBS Bloomberg reported comments from Dominic Schnider, Head of Commodity & APAC FX, UBS Wealth Management, expressing his view on gold in 2018.  

According to Annette Beacher, Chief Asia-Pac Macro Strategist at TDS, Adrian Orr as RBNZ Governor is an excellent choice as he is a person considered

According to Annette Beacher, Chief Asia-Pac Macro Strategist at TDS, Adrian Orr as RBNZ Governor is an excellent choice as he is a person considered to be an ‘internal’ candidate given his extensive RBNZ experience, but also has widespread “outside” experience including a decade as the CEO of the successful sovereign wealth fund NZ Super Fund.Key Quotes“Orr was always on the short list of potential candidates.” “NZD firmed 30pips to $US0.6889 on the headlines. We have no strong view as to whether he’s a dove or a hawk, but some of the “uncertainty” premium has been reversed.” “He assumes the role in late March 2018. By then, we ‘should’ know the RBNZ’s newly expanded mandate, and whether there will be a “board” decision-making process with votes and minutes.” “Now that a key uncertainty has been resolved, the markets can turn to Thursday’s half-year budget update (HYEFU) and the extent of the planned deterioration in the fiscal books to “pay for” the litany of the LNG coalition’s policies.”

Analysts at ANZ note that US non-farm payrolls were fairly solid for November. Employment rose 228k and unemployment held steady at 4.1%. Key Quotes

Analysts at ANZ note that US non-farm payrolls were fairly solid for November. Employment rose 228k and unemployment held steady at 4.1%.Key Quotes“However, average earnings disappointed rising 2.5% y/y (vs expectation 2.7% y/y). In a nutshell, economic and employment momentum remains very solid, but wage growth is subdued in the context of the broader environment. While this might dumbfound historical economic thinking such dynamics are something New Zealand has become well accustomed. Namely the Philips curve is very flat despite broader economic momentum red lining.” “The reasons for this flattening have included inflation expectations being well anchored, technological change, global integration of supply chains, increased labour mobility and low global inflation. So it would seem many of these same reasons can equally apply to the US. It’s unlikely to deter the Fed in the short-term though as they take the opportunity of above trend growth to normalise interest rates gradually towards some perceived neutral rate and give themselves some future wiggle room when the next downturn occurs.”

Dominick Stephens, Research Analyst at Westpac, notes that Adrian Orr has been appointed Governor of the Reserve Bank of New Zealand, and will begin h

Dominick Stephens, Research Analyst at Westpac, notes that Adrian Orr has been appointed Governor of the Reserve Bank of New Zealand, and will begin his five year term on March 27. This will be seen by markets as a balanced and credible choice, he further adds.Key Quotes“Adrian is currently Chief Executive Officer of the New Zealand Superannuation Fund. He has done two previous stints at the Reserve Bank - from 1997 to 2000 he was Head of the Economics Department, and from 2003 to 2007 he was Deputy Governor and Head of Financial Stability. Between those stints he was Chief Economist at Westpac, where a key part of his role was to monitor and forecast the Reserve Bank's actions.”  “While this is not an internal appointment, Adrian is closer to being a Reserve Bank insider than other recent Governors. Neither of the past two Governors had ever worked for the Reserve Bank before they were appointed, and Don Brash worked there only briefly as a graduate.”  “Adrian will start with an excellent understanding of the Reserve Bank and both of its key policy functions, monetary policy and financial sector regulation. He is well known as a strong communictor and is no stranger to the media, which bodes well for the clarity of communications with financial markets.”  “The key area of interest to us is how the new Governor will interpret the intended "dual mandate" - the Government's intention to have the Reserve Bank target both employment and inflation. The law won't be changed before Mr Orr starts, but the Policy Targets Agreement signed by the incoming Governor and the Minister of Finance will reflect the spirit of the impending law change, so the RBNZ's reform will presumably start immediately.” “We have been wary of the dual mandate, because it might make it harder for the Reserve Bank to raise interest rates and rein in inflation when it is too high (since doing so could conflict with a directive to maximise employment). With Adrian Orr as Governor, we would expect the Reserve Bank to remain realistic about what monetary policy can achieve in the long run, while at the same time paying attention to employment over economic cycles.”  “The New Zealand dollar rose half a cent on the news of the appointment, and interest rates rose slightly.”   

According to the results of Bloomberg survey, a majority of the economists see the Fed raising the interest rates three times next year. Key Findings

According to the results of Bloomberg survey, a majority of the economists see the Fed raising the interest rates three times next year.Key Findings:Three rate hikes seen in 2018: March, September, December. Fed's growth forecast likely to be revised to 2.3% from 2.1% than in September's meeting projections. The revision in forecast comes from the new tax plan and faster global growth. 63% of respondents say risks to monetary policy is to the upside. 90% of respondents expect future path of interest rates over the next 2 years to be "about the same" under Powell, as compared to Yellen. 45% said an external economic/financial shock would present the greatest risk to markets in 2018. 39 of 41 respondents expect 2018 inflation to run around 1.9% based on the core PCE inflation reading, while expecting the GDP growth to come in around 2.3% next year.

Westpac's strategist Imre Speizer posted his reaction on the recent spike in the NZD/USD pair just ahead of 0.69 handle, citing that there is "no fun

Westpac's strategist Imre Speizer posted his reaction on the recent spike in the NZD/USD pair just ahead of 0.69 handle, citing that there is "no fundamental logic" for the NZD's spike to the announcement earlier. He added that it could be due to relief that uncertainty over the new governor has been removed.   NZD CFTC positioning is still short and is now undervalued, so a move higher over the next few weeks makes sense, he said.

Comments from North Korea are crossing the wires via FT- Cruel violation on our sacred sovereignty and dignity and another public declaration of wa

Comments from North Korea are crossing the wires via FT- Cruel violation on our sacred sovereignty and dignity and another public declaration of war.  If they show any slight sign of carrying out the sea blockade, they should prepare for immediate and ruthless self-defensive countermeasures. 

The S&P had a tough start to the week as carrying over from the previous week the S&P 500 fell for four sessions, its longest losing streak since Marc

The S&P had a tough start to the week as carrying over from the previous week the S&P 500 fell for four sessions, its longest losing streak since March, abut still managed to close higher for the third week in a row, notes the research team at BBH.   Key Quotes“It gapped higher ahead of the weekend and did not look back.  The gap is found between roughly 2641 and 2644.   Indications from key Senators that the Alternative Minimum Tax would not be included in the final bill may helped equities recover.  The NASDAQ also gapped higher ahead of the weekend, but it was not quite enough to lift in on a weekly basis.  Once again, investors seemed keen to buy the pullback in the stock market.”   “The US 10-year yield has largely been confined to a 2.30% to 2.40% since late September.  The range is not rock solid as there have been several false breaks.   However, it is interesting to note that the five, 20 and 50-day moving averages converge in the middle of the range.  The December 10-year note futures contract is showing little propensity to move out of the 124-06 and 125-06 range. The technical indicators are not generating strong signals, which warn that range-trading may persist.”      

The bid tone around the NZD gathered pace after New Zealand's government on Monday appointed pension fund chief Adrian Orr as the new governor of the

NZ fin min appoints Adrian Orr as RBNZ chief. Orr to take up role on Mar. 27. Potential bullish reversal on charts. The bid tone around the NZD gathered pace after New Zealand's government on Monday appointed pension fund chief Adrian Orr as the new governor of the nation's central bank. The NZD/USD pair rose to a session high of 0.6906 and was last seen trading at 0.6887 levels. The new labor government 's plans to add maximizing employment to the central bank's inflation objective. However, it is widely believed that Orr is unlikely to move away dramatically from the inflation target, i.e. the central bank would remain open to tightening the screws if price pressures start building up. Consequently, the NZD gained altitude. Looking ahead, the spot may find it difficult to cut through the descending 50-day MA of 0.6945 in anticipation of the Fed rate hike on Wednesday. That said, the greenback could be offered on fact (rate hike) post-Fed. Further, a positive close today would confirm a bullish doji reversal.NZD/USD Technical LevelsA move above 0.6917 (Dec. 6 high) could see the spot test supply around 0.6945 (50-day MA). A close above the same would open doors for a break above 0.71 (psychological levels). On the other hand, a break below 0.6863 (5-day MA) would shift risk in favor of a drop to 0.6816 (Dec. 1 low) and 0.6780 (Nov. 17 low).  

The rebound in the GBP/USD pair lost legs just ahead of 1.34 handle, with the bulls now on the defensive awaiting fresh impetus from the plenty of ris

DXY offered in Asia. Mixed US jobs data. The UK PM May’s cabinet meeting eyed. The rebound in the GBP/USD pair lost legs just ahead of 1.34 handle, with the bulls now on the defensive awaiting fresh impetus from the plenty of risk events lined up in the week ahead.GBP/USD: 1.3350 still in sightThe Cable remains better bid so far this Monday, consolidating the recovery from mid-1.33s as the dust settles over the historic Brexit deal aftermath, with the focus now shifting on the fundamentals alongside fresh development around the Brexit deal. The US dollar ran through fresh offers in Asian, as the Asian traders reacted to the weak wage growth data in the US labor market report released last Friday, aiding the recovery in GBP/USD. The US States Average Hourly Earnings (MoM) registered at 0.2%, below expectations (0.3%) in November. However, further upside appears limited, as the divergent monetary policy outlooks between the Fed and BOE will be back in play ahead of the FOMC decision due out this Wednesday, especially after the BOE delivered a dovish rate hike last month. Meanwhile, markets look forward to the UK PM Theresa May’s cabinet meeting scheduled later today, with the key agenda on the Brexit negotiations ahead of this week’s EU Summit. GBP/USD Technical LevelsAccording to Valeria Bednarik, Chief Analyst at FXStreet: “Shorter term, and according to the 4 hours chart,  the risk is towards the downside, yet also without confirming it, as the pair settled below its 20 SMA, now gaining downward traction, while technical indicators turned lower around their mid-lines. Support levels: 1.3345 1.3300 1.3260. Resistance levels: 1.3420 1.3460 1.3500.”

Light sweet crude oil for January delivered gained more than 2% over the last two sessions, but closed lower for the second consecutive week, points o

Light sweet crude oil for January delivered gained more than 2% over the last two sessions, but closed lower for the second consecutive week, points out the research team at BBH. Key Quotes“The build in US gasoline stocks warns that some of the oil surplus was shifted into the products. The recent pullback has been sufficient to drive the five-day average through the 20-day average for the first time since mid-October.  However, we would fade this cross-over and look for higher prices.  Initially, resistance is seen near $58.  A convincing move above there would likely signal a move to new highs for the year.  The current high was set on November 24 a little above $59.  The low for the year was set on June 21 near $43.40.”

New Zealand’s economic growth has slowed to a more modest pace this year, and it’s increasingly likely that it will fall short of the quite optimistic

New Zealand’s economic growth has slowed to a more modest pace this year, and it’s increasingly likely that it will fall short of the quite optimistic official projections, according to analysts at Westpac. This will have left the new Government with some difficult trade-offs as it prepared its first fiscal update, for release this week, they further add.Key Quotes“In recent days we’ve had the last of the major indicators for September quarter GDP, which will be published later this month. Overall, the results were solid but not spectacular. Residential building rose by 4.1% in the quarter, following two small declines that may have been affected by the unusually wet weather over the first half of the year. Nonresidential building work rose by 0.6% nationwide, with the quake rebuild winding down in Canterbury but activity picking up elsewhere. Wholesale trade rose by 1.1%, in line with the growth in recent quarters, and manufacturing activity recorded solid gains outside of a drop in meat and dairy processing.” “We’ll finalise our GDP estimate this week, but the latest data releases are consistent with our forecast of just 0.4% growth for the quarter. We should emphasise that this is not a sign of broad-based weakness in the economy. Much of it is due to a drag from the primary sectors: wet weather weighed on milk production at the start of the new season, and oil and gas extraction continued its natural decline. There was also a pullback in accommodation and hospitality, after a strong June quarter that was boosted by sporting events such as the Lions rugby tour.” “Nevertheless, it’s fair to say that we’re not seeing particularly strong growth in other areas that could offset the weak spots. That’s even more apparent when you consider the rapid growth in the population, which is feeding demand for a range of goods and services. (Net migration started to turn down in the September quarter, but remains very high – population growth is still running at around 2% a year.) In per capita terms, the economy has barely grown at all so far this year.” “What’s more, there are some worrying signs for growth going into the early part of 2018. As we noted last week, business confidence has fallen sharply in recent months. Some of that could be put down to a knee-jerk reaction to the new Labour-led government, but the decline began even before then and has been larger than we’ve seen during previous changes of government. There is a risk that pessimism about the economy becomes self-fulfilling as businesses hold back on hiring and investment.” “To top it off, there’s a growing risk of drought this summer. The unusually wet weather through much of this year has abruptly turned into a hot and dry spell since November, thanks to a combination of a developing La Nina weather pattern and abnormally high sea temperatures in the south. Many parts of the country were unusually dry even before the official start of summer, and while there’s plenty of grass at the moment after earlier rains, new pasture growth has dropped off sharply in the last month.” “Lest we sound too gloomy, we should note that we still expect the economy to grow at a modest underlying pace, beneath the quarterly volatility in GDP. The September quarter is shaping up to be the weak spot for the year, but recent activity data points to a strong start to the December quarter. There are some challenges to the outlook for next year, but the economy seems to be coming from a stronger starting point than financial markets and business surveys are giving it credit for.”

EUR/GBP one-month risk reversals hit the one-month low of 0.225 after the UK and EU reached a deal on Brexit divorce terms on Friday. Risk reversals

EUR/GBP one-month risk reversals hit the one-month low of 0.225 after the UK and EU reached a deal on Brexit divorce terms on Friday.Risk reversalsThe retreat from the recent high of 0.425 to 0.225 indicates falling demand for the EUR calls. So, the recovery in the EUR/GBP pair from the low of 0.8689 could be short-lived. As of writing, the pair is trading at 0.8790 and below the 200-day MA level of 0.8801.

The Australian dollar fell in four sessions last week and eight of the past 11 and lost 1.4% last week to test a six-month low near $0.7500, notes the

The Australian dollar fell in four sessions last week and eight of the past 11 and lost 1.4% last week to test a six-month low near $0.7500, notes the analysis team at BBH. Key Quotes“The central bank is clearly on hold.  A mild disappointing Q3 GDP, due to softer consumption, and a much smaller October trade surplus (A$105 mln vs expectations for ~A$1.4 bln and A$1.6 bln in Sept) reinforced the signal from the Reserve Bank of Australia.    A note of caution comes from the Bollinger Band, which the Ausise closed below (~$0.7520) for the last two sessions.  A bounce into the $0.7540-$0.7560 may offer a new selling opportunity.”   

The Nikkei Asian Review reports that the Japanese companies are expected to get 20% tax reduction if they raise wages.

The Nikkei Asian Review reports that the Japanese companies are expected to get 20% tax reduction if they raise wages.

Bill Evans, Research Analyst at Westpac, explains that the signals from the September quarter national accounts indicate that official forecasts for c

Bill Evans, Research Analyst at Westpac, explains that the signals from the September quarter national accounts indicate that official forecasts for consumption (60% of GDP) growth are too high and will probably need to be revised when MYEFO is released before Christmas. This will also probably have implications for the RBA's own growth forecasts, he further adds.Key Quotes“Both the Reserve Bank and Treasury will be disturbed by the details behind the September quarter national accounts which printed on December 6.” “The accounts showed that the Australian economy expanded by a less than expected 0.6% in the September quarter to deliver an annual growth rate of 2.8%.” “Treasury’s May forecasts and the RBA’s November forecasts are remarkably similar giving us a reasonable insight into the RBA’s likely forecast profile.” “For 2017/18 (year average) Treasury forecasts 2.75% growth and for 2018/19 (year average) Treasury forecasts 3%.” “For 2017/18 (year average) the RBA forecasts 2.75% growth and for 2018/19 (year average) the RBA forecasts 3.25%.” “Westpac’s year average forecasts are 2.7% (2017/18) and 2.5% (2018/19).” “Note that our forecasts for 2017/18 are close to Treasury’s current number due to Westpac having stronger business investment and government spending forecasts. Treasury is likely to lift their forecasts in that area for 2017/18 but from a policy perspective the key forecast will be 2018/19 where our forecasts are much weaker than Treasury.” “Finally, we have not changed our through the year GDP forecasts from 2.5% in both 2018 and 2019.” “Our slightly lower consumption profile is offset by a stronger profile for government spending.” “However the risks to our growth forecasts are firmly to the downside with only a modest further slip in our consumption profile seeing growth in 2018 slide to a disturbing 2.25%.”

The Canadian dollar is stuck in a clear range, perhaps a rectangle pattern and the lower end is seen near CAD1.2660 and the upper end is seen near CAD

The Canadian dollar is stuck in a clear range, perhaps a rectangle pattern and the lower end is seen near CAD1.2660 and the upper end is seen near CAD1.2920, according to analysts at BBH.Key Quotes“The upper end of the range corresponds to the 50% retracement of the US dollar's slump from May through September.   The lower end was frayed intraday on December 5.  The statement after the central bank meeting the following day showed no urgency to remove additional accommodation.  The broad sideways trading weakens the signals generated by the technical tools we use.  The two-year interest rate differential widened in the US favor by five basis points over the course of last week, but it too appears range-bound.”  

Michael Gordon, Research Analyst at Westpac, notes that New Zealand’s card spending rose 1.4% in November, partly due to higher fuel prices but with s

Michael Gordon, Research Analyst at Westpac, notes that New Zealand’s card spending rose 1.4% in November, partly due to higher fuel prices but with strong gains in the core retail categories as well.Key Quotes“Spending on debit and credit cards rose strongly in November, beating market expectations. In addition, spending in October was revised higher. Spending growth has picked up after a flat patch through the middle of 2017.” “Retail card spending rose by 1.2%, beating even our top of the range forecast of 0.8%. The total was boosted by a 5% rise in fuel spending, which was in line with the rise in petrol prices over the month. Spending in the core retail categories rose by 0.8%, led by a 1.2% rise in both durables and hospitality, and a 2.7% rise in clothing.” “November was filled with anecdotes of retailers increasingly adopting the US trend of 'Black Friday' sales. However, the jury is out on whether this leads to more spending or simply shifts the timing of spending.” “One factor that may have contributed to the recent pickup in consumer spending is the link to housing wealth. House prices flattened out over the first half of this year but have picked up again in recent months, and card spending has more or less followed suit.” “The strength of the housing market is a critical part of our outlook for the New Zealand economy. We expect that the new Government's policies aimed at cooling housing demand will see house prices fall slightly in 2018, which in turn would dampen growth in consumer spending.”  

The euro fell through the November uptrend line early last week and continued to trend lower as it recorded six sessions without an advance, the longe

The euro fell through the November uptrend line early last week and continued to trend lower as it recorded six sessions without an advance, the longest such since November 2016, points out the research team at BBH. Key Quotes“The euro approached the 61.8% retracement objective of the November gains (~$1.1710), which also corresponds to the low from late last month. The technical indicators are moving lower.  The $1.1700 area is important support.  A break could spur a test on even more significant support in the $1.1550-$1.1600 band.” “The US two-year premium over Germany increased by seven basis points to 2.54%, while the 10-year premium widened a couple basis points.  At 2.075, it is the widest in eight months.”  

Kuwait's oil minister Essam al-Marzouq said on Sunday that OPEC and other oil producers will study before June the possibility of an exit strategy fro

Kuwait's oil minister Essam al-Marzouq said on Sunday that OPEC and other oil producers will study before June the possibility of an exit strategy from the global oil output cut deal. "There are still meetings every couple of months for the ministerial monitoring committee, and there will be a study formed for the possibility of an exit strategy... before June", he said. However, the major producers are still not on the same page regarding the exit strategy. Last week, Russian Energy Minister Alexander Novak said that it was too early to talk about a possible exit from the global deal to cut oil production, and the eventual withdrawal from the agreement should be gradual.

According to the joint survey by the Japanese Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office, the op

According to the joint survey by the Japanese Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office, the optimism about Japan’s economic conditions among large Japanese manufacturers improved in the October-December quarter, in another upbeat sign for an economy on a record run of growth. The business survey index (BSI) of sentiment at large manufacturers stood at plus 9.7, up from plus 9.4 in July-September.Key Reasons cited via Reuters:The mood was brightened by a weaker yen and a 12 percent jump in the Nikkei .225 stock average. Sales and profits were up led by auto manufacturers and makers of electronic parts for smartphones. A big contributor to growth during the quarter was capital spending. The BSI measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to decline.

Friday's doji candle on the EUR/USD and the failure on the part of the bears to keep the spot below 50-day MA signals the bearish move from the recent

Friday's doji candle indicates indecision/bearish exhaustion. Positive follow-through today would confirm the bullish doji reversal. Focus on the Fed and the ECB. Friday's doji candle on the EUR/USD and the failure on the part of the bears to keep the spot below 50-day MA signals the bearish move from the recent high of 1.1961 may have run out of steam. Still, it is too early to call a bottom as only a positive follow-through today (close above the ascending 100-day MA of 1.1801) would confirm the bullish doji reversal.Focus on central banksWhile a confirmation of the bullish doji reversal would be good news, still FX strategists call for caution. Kathy Lien from BK Asset Management says, "despite improvements in the labor market, manufacturing, and service sector activity, we don't expect the central bank to change their views and a reminder of their dovish stance could extend the slide in EUR/USD below 1.17, or have little impact on the currency." That said, the spot may find bids as the USD could fall on the rate hike announcement, giving investors the opportunity to buy at lower levels. Also, EUR's trajectory could be influenced by the German Zew survey and Eurozone PMIs.EUR/USD Technical OutlookValeria Bednarik, Chief Analyst at FXStreet, writes, "technically, the EUR/USD pair is at risk of falling further, given that in the daily chart it settled below its 20 and 100 DMAs, whilst technical indicators entered the negative territory, maintaining their bearish momentum. Furthermore, the pair broke below the 61.8% retracement of its previous weekly advance, which converges with the mentioned 100 DMA at 1.1800, becoming the immediate resistance. Shorter term, the upward potential also seems limited, as in the 4 hours chart, the price settled below a bearish 20 SMA, while technical indicators managed to correct oversold conditions before losing strength upward, still within the negative territory. The key support is November 21st low at 1.1712, with a break below it favoring a test of the strong static support at 1.1660." Support levels: 1.1750 1.1710 1.1660 Resistance levels: 1.1800 1.1830 1.1860  

Reuters reporting the latest headlines citing that the New Zealand government appointed Adrian Orr as the new Reserve Bank of New Zealand (RBNZ) Gover

Reuters reporting the latest headlines citing that the New Zealand government appointed Adrian Orr as the new Reserve Bank of New Zealand (RBNZ) Governor. The NZ Government says Orr will take up the role on March 27. In the meantime, Grant Spencer will continue his role as the acting RBNZ Governor after having replaced by Graeme Wheeler.

Bloomberg reported comments from Dominic Schnider, Head of Commodity & APAC FX, UBS Wealth Management, expressing his view on gold in 2018. Key Point

Bloomberg reported comments from Dominic Schnider, Head of Commodity & APAC FX, UBS Wealth Management, expressing his view on gold in 2018.Key Points:Short-term pain seen for gold. Gold in 2018 may see price around $1200/oz. Stronger physical demand likely towards end of 2018. Oil could slide to $57/bbl short here.

Goldman Sachs’ Analysts came out with a brief preview on their expectations on the final FOMC meeting of this year, with a rate hike widely priced-in

Goldman Sachs’ Analysts came out with a brief preview on their expectations on the final FOMC meeting of this year, with a rate hike widely priced-in by the markets.Key Quotes:“FOMC almost certain to deliver the third rate hike of 2017. Attention is likely to focus on the outlook for 2018 and beyond. In particular on how the Federal Reserve will react to a tax reform that now appears likely to become law. The economic data have improved slightly on net since the FOMC last met in early November. Growth momentum has remained strong. Unemployment rate has fallen further. The latest inflation data were encouraging. Financial conditions have eased once again, as they have in the aftermath of each Fed tightening action so far in this hiking cycle. In light of both the stronger growth momentum and the prospect of tax cuts. We expect the Summary of Economic Projections to upgrade GDP growth in 2018 and 2019. And to mark down the unemployment path by two-tenths to 3.9%, offset only partly by a one-tenth reduction in the longer-run unemployment rate to 3.5%. We expect the 2018 inflation projections to remain at 1.9%. We continue to expect four rate hikes next year.“  

The NZD/USD pair broke its downside consolidative mode and broke higher in Asia this Monday, as the renewed US dollar weakness offset weak Chinese inf

Bearish NZIER and China data weigh? Catches fresh bids on resurgent USD supply. The NZD/USD pair broke its downside consolidative mode and broke higher in Asia this Monday, as the renewed US dollar weakness offset weak Chinese inflation numbers and softer NZ growth expectations.NZD/USD back to test 20-DMA at 0.6861The spot rallied nearly 30-pips so far this session, mainly driven by the USD dynamics, as the post-NFP recovery in the USD index lost legs just ahead of the 94 handle, now pushing the rates back towards 93.80 levels. However, the Kiwi stalls the renewed upside as a miss on the Chinese CPI figures and the expectations for a softer New Zealand’s growth outlook appear to weigh negatively on the NZD. China is New Zealand’s top trading partner.   NZIER Consensus Forecasts shows softer growth outlook for New Zealand Expect NZD/USD to average 65.9 cents by Q4 in 2018 – ASB Survey From a wider perspective, the major extends its last week’s range-play into a new week, unable to find the clear direction on the Chinese inflation data, as markets await the FOMC decision and Chinese data dump for the range break-out. In the meantime, the sentiment around the US dollar will play a key role ahead of the US CPI and PPI data releases.NZD/USD Levels to consider The spot trades near 0.6850 (psychological levels), below which 0.6835 (daily low) and 0.6780 (multi-month lows) are key near-term downside areas. To the topside, a break above 0.6900/09 (round number/ 50-DMA) could open doors towards 0.6946 (Nov 28 high).

There is no respite for gold bulls, indicates the drop in the risk reversals gauge to fresh 11-month low on Friday. Risk reversals The XAU/USD one

There is no respite for gold bulls, indicates the drop in the risk reversals gauge to fresh 11-month low on Friday.Risk reversalsThe XAU/USD one-month 25 delta risk reversals fell to -1.45 on Friday; the lowest level since Jan. 4, indicating the demand for the downside bets (Put options) continues to rise. With the Fed set to hike rates this week, the yellow metal could remain under pressure as suggested the falling risk reversals. As of writing, the yellow metal is at $1248 levels.

ASB Bank, a bank owned by Commonwealth Bank, operating in New Zealand, came out with its latest currency survey, which Surveys businesses' expectation

ASB Bank, a bank owned by Commonwealth Bank, operating in New Zealand, came out with its latest currency survey, which Surveys businesses' expectations for the NZD/USD and business hedging plans.Key Findings:“A clear turnaround in NZD sentiment was evident. Now expect the NZD/USD to average 65.9 cents by Q4 in 2018, which compares to a 12-month outlook of 75 US cents just three months ago. Respondent groups have a similar outlook, irrespective of their trade focus or size of the operation. There were differences by trade orientation, with the lower NZD reducing hedging intentions for exporters (52.4%), increasing intentions for importer/exporters (at 97%, the highest on record), with those for importers steady at around 90%. For those enterprises that plan to hedge, the cover is equivalent to 93.7% of FX exposures, the highest on record”.  

The decline in the EUR/USD from the recent high of 1.1961 has weakened demand for the EUR calls, shows the one-month 25 delta risk reversals gauge. R

The decline in the EUR/USD from the recent high of 1.1961 has weakened demand for the EUR calls, shows the one-month 25 delta risk reversals gauge.Risk reversalsThe risk reversals gauge fell to 0.10; the lowest level since Nov. 14. The drop from the Nov. 27 high of 0.55 clearly indicates the falling demand for the bullish bets (EUR calls). The risk reversals could turn negative, highlighting the rise in demand for EUR Puts, if the spot closes below the 50-day MA support of 1.1758.

Kuwait’s Oil Minister Issam Almarzooq told Bloomberg on the sidelines of the annual meeting of the Organization of Arab Petroleum Exporting Countries

Kuwait’s Oil Minister Issam Almarzooq told Bloomberg on the sidelines of the annual meeting of the Organization of Arab Petroleum Exporting Countries on Sunday, OPEC and its global allies including Russia may end their production cuts before 2019 if the crude market re-balances by June.Key Quotes:“We still have a full year left in the agreement, but there is a possibility that we exit the cuts agreement before 2019 if the market is re-balanced by June.” “There is pressure from Russia to exit the deal as soon as possible” once the market is balanced.

A Bloomberg report says the Citigroup and JPMorgan economists expect the average interest rate across advanced economies will climb to at least 1 perc

A Bloomberg report says the Citigroup and JPMorgan economists expect the average interest rate across advanced economies will climb to at least 1 percent next year. That would be the biggest increase in rates since 2006. 

The Reserve Bank of New Zealand (RBNZ) Governor Grant Spencer said in an interview with TVNZ broadcast on Sunday, Bitcoin is a bubble. Key Quotes via

The Reserve Bank of New Zealand (RBNZ) Governor Grant Spencer said in an interview with TVNZ broadcast on Sunday, Bitcoin is a bubble.Key Quotes via Bloomberg:"It looks remarkably like a bubble forming to me"  "Over the centuries we've seen bubbles, and this appears to be a bit of a classic case. With a bubble, you never know how far it's going to go before it comes down."

Bloomberg quoted a person familiar with the matter, as citing that the US President Donald Trump will deliver closing arguments for the proposed Repub

Bloomberg quoted a person familiar with the matter, as citing that the US President Donald Trump will deliver closing arguments for the proposed Republican tax plan on Wednesday. No further details have been mentioned.

AUD/USD is up 0.11 percent in Asia, adding credence to Friday's doji candle, although only a close today above 0.7534 (Friday's high) would confirm a

Friday's doji candle shows indecision/bearish exhaustion. AUD/USD holds 0.75 in Asia despite China PPI hitting a 4 - month low in Nov. AUD/USD is up 0.11 percent in Asia, adding credence to Friday's doji candle, although only a close today above 0.7534 (Friday's high) would confirm a bullish doji reversal.China PPI missed estimatesReuters report says, "producer prices rose 5.8 percent from a year earlier - the lowest since July, the National Bureau of Statistics said on Saturday. The rise was slightly less than market expectations and compared with the previous month’s 6.9 percent increase." The slowdown in China's (factory gate prices) PPI is bad news for the reflation trade and could weigh over commodity prices. Still, the AUD/USD pair has been able to defend 0.75.AUD/USD - Is 0.74 the next downside target?Kathy Lien from BK Asset Management writes, "AUD selling pressure is intense and with AUD/USD ending the week below the 100-week SMA, 74 cents could be the next level challenged if the upcoming labor market report falls short of expectations."AUD/USD Technical LevelsJim Langlands from FX Charts writes, "after a brief spike to 0.7533, AudUsd is trading heavy after Friday’s NFP figures, currently just holding above 0.7500 but seemingly set to test strong support at 0.7470/80. Below here, unlikely today I think, would allow a run towards 0.7400." "Although the short-term momentum indicators are a bit mixed, trading from the short side continues to be the plan ahead of the FOMC Meeting (Wed), when the Fed is expected to hike rates. I therefore suspect that further upside for the Aud will be limited and selling into rallies is still preferred.  The 0.7470/80 area will be strong, so taking some profit on shorts and looking to resell into a rally may be a plan."  

The People's Bank of China (PBOC) set the Yuan reference rate at 6.6152 vs. Friday's fix of 6.6218

The People's Bank of China (PBOC) set the Yuan reference rate at 6.6152 vs. Friday's fix of 6.6218

The British Chamber of Commerce (BCC) has revised the UK GDP forecasts lower as the Brexit uncertainty is likely to hurt business investment.  BCC no

The British Chamber of Commerce (BCC) has revised the UK GDP forecasts lower as the Brexit uncertainty is likely to hurt business investment.  BCC now sees the economy expanding 1.5 percent in 2017 vs. 1.6 percent previous. The 2018 and 2019 GDP forecasts have been trimmed to 1.1 percent (from 1.2 percent) and 1.3 percent (from 1.4 percent), respectively.  Adam Marshall, BCC director general, said, “despite last week’s deal, Brexit uncertainty still lingers over business communities, and is undermining many firms’ investment decisions and confidence. Despite pockets of resilience and success, and strong results for some UK firms, the bigger picture is one of slow economic growth amid uncertain trading conditions.”  

The Bank of Japan (BOJ) cut its annual buying target for domestic exchange-traded funds (ETF) by as much as a third from the current JPY 6 trillion sa

The Bank of Japan (BOJ) cut its annual buying target for domestic exchange-traded funds (ETF) by as much as a third from the current JPY 6 trillion says a Bloomberg report released today. With inflation and the economy showing signs of life, the central bank will find it hard to justify the massive purchases. As of October, the central bank owned 74 percent of the nation's ETF market.

US wage growth did disappoint expectations on Friday, still, the USD/JPY clocked to a 4-week high in early Asia as strong hiring reinforced expectatio

USD/JPY has faded the spike to a 4-week high. Downside limited on Fed rate hike bets. US wage growth did disappoint expectations on Friday, still, the USD/JPY clocked to a 4-week high in early Asia as strong hiring reinforced expectations of a third Fed rate hike this year. The currency pair rose to 113.63; the highest level since Nov. 14. At the time of writing, it was trading at 113.50 levels. The non-farm payrolls released on Friday showed the economy added 228,000 jobs in November, beating the expected figure of 195,000. Meanwhile, average hourly wages rose 2.5 percent on the year, up from 2.4 percent previously, but missing forecasts of 2.7 percent. Despite the weak wage growth numbers, the greenback ended the last week higher against all of the major currencies and could retain the bid tone as the Fed is expected to hike rates by 25 basis points this Wednesday. However, the bid tone around the Yen could strengthen as speculation is gathering pace that the BOJ is likely to cut its ETF Purchases soon.BOJ - Harpooning the ETF Whale?The Bank of Japan (BOJ) could cut its annual buying target for domestic exchange-traded funds by as much as a third of the current 6 trillion yen ($53 billion), says a Bloomberg report. That said, the BOJ would still remain the most stimulative central bank in the world. Hence, the downside in the USD/JPY could be limited.USD/JPY Technical OutlookJim Langlands from FX Charts writes - "US$Jpy finished the week on a positive note, assisted by a minor uptick in US yields (US10Y – 2.377%) and still looks pretty firm on all fronts, so trading from the long side is preferred.1 hour/4 hour indicators: Turning higherDaily Indicators: Turning higherWeekly Indicators:  NeutralPreferred Strategy:  With the momentum indicators aligning higher, a test of 113.80 would not surprise, beyond which 114.00/05 will see sellers ahead of a possible towards 114.30 and even 114.75. Look to buy dips towards 113.00/10 with a SL placed sub 112.80."

Japan BSI Large Manufacturing (QoQ) increased to 9.7 in 4Q from previous 9.4

Japan Money Supply M2+CD (YoY): 4% (November) vs previous 4.1%

NZIER survey of economists shows expectations of slower growth for the next few years in New Zealand. Headlines  Modestly softer growth outlook for

NZIER survey of economists shows expectations of slower growth for the next few years in New Zealand.Headlines Modestly softer growth outlook for the next few years Overall, the growth outlook remains positive Downward revisions to forecasts for household spending and business investment Consumer and business confidence have eased Uncertainty about the effects of new Government policies near-term weakness in housing construction

James Knightley, Chief International Economist at ING, explains that with the US economy growing strongly, inflation broadly in line with target and p

James Knightley, Chief International Economist at ING, explains that with the US economy growing strongly, inflation broadly in line with target and policy being normalized, Yellen can sign off her final FOMC press conference satisfied with a job well done. Key QuotesThe December 13 FOMC meeting is the last one for Fed Chair Janet Yellen that involves a press conference – the January FOMC meeting will just see a press release - ahead of handing the Fed Chair role to Jay Powell in February.  Given the economy is in much better shape than it was when she took over from Ben Bernanke and the fact that she is both hiking rates and shrinking the Fed’s balance sheet, Yellen can take immense satisfaction from the job she has done. In terms of what to expect, markets widely anticipate a 25bp hike, after which we suspect she will sound a cautiously optimistic tone but offer little in the direction of future guidance to give incoming Chair Powell maximum flexibility. With 3% annualised growth in the second and third quarter of 2017, business surveys suggest the 4Q figure should be just as strong. The combination of robust domestic economic activity, an improving global backdrop and the prospect of meaningful tax cuts mean that 3% is now a realistic possibility for 2018. Inflation is below target, but here too we think there is movement with dollar softness pushing up import costs, a tight labour market suggesting upside risk to inflation and the housing component starting to exert upward influence. Given this backdrop, we see broad support for a December hike within the FOMC.

The Economics Team at Westpac offered their take on the upcoming Australian employment report, due on Thursday,  noting that a continuation of the nea

The Economics Team at Westpac offered their take on the upcoming Australian employment report, due on Thursday,  noting that a continuation of the near term momentum, at least into early 2018, is likely. Key QuotesTotal employment was softer than expected in October lifting just 3.7k, below Westpac and the market’s expectation of +20k and +18.0k respectively. September’s result was revised up to 26.6k from 19.8k. In the month total hours worked rose by a more reasonable 0.3%. This relates to a 24.3k increase in fulltime employment, which was mostly offset by a 20.7k decrease in part-time employment. Over the past year, total employment is up 3.0%yr with full-time employment increasing 3.7%yr and part-time employment increasing 1.5%yr. The business and consumer surveys remain quite robust suggesting a continuation of the near term momentum at least into early 2018. Our forecast 25k lift in employment will see the annual pace ease back to 2.8%yr from 3.0%yr.  In October, the unemployment rate fell to 5.4% the lowest seen since February 2013 but is still above most estimates of full employment of around 5.0%. The October drop in unemployment was due to a drop in the participation rate to 65.1% from 65.2%; male participation was down from 70.7% to 70.5%. The overall participation rate drop appears to be concentrated in Vic, down to 65.7% from 66.3%, back to near the level seen in February this year. We are expecting to see a small 0.1ppt bump up in the participation rate with the robust employment number. This will be enough to offset the employment gains thus holding the unemployment rate flat at 5.4%.

According to Nomura Economics Team, all looks set for a rate hike from the FOMC at the December meeting this Wednesday as well as a trend-like increas

According to Nomura Economics Team, all looks set for a rate hike from the FOMC at the December meeting this Wednesday as well as a trend-like increase in core CPI for November.Key QuotesWe expect a rate hike from the FOMC at the 12-13 December meeting, increasing the target range 25bp to 1.25-1.50%. Recent speeches from FOMC participants indicate that a comfortable majority of the committee is ready for a third rate hike in 2017. Inflation concerns may have eased somewhat after October’s healthy reading on core PCE inflation. Moreover, incoming economic data suggest the current strong pace of growth remains intact heading into 2018. The October/November FOMC meeting minutes noted that “many participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged”. Since that meeting, incoming information has, if anything, increased the upside risk for the medium-term outlook. Strong growth, recovering inflation and tightening labor markets, combined with the now-likely passage of the Republican tax plan, all point to sustained growth above potential over the medium term. As has been the case since October, we expect little if any language from the Committee on the balance sheet unwind beyond a note that it continues to proceed as explained in the Committee’s addendum.  Regarding the forecasts (SEP), we expect real GDP growth forecasts for 2017, 2018 and possibly 2019 to be revised up reflecting on incoming data and an incorporation of a modest boost from tax cuts. The continued decline in the unemployment rate during the inter-meeting period will likely result in a lower projection from FOMC participants over the forecast horizon. Finally, steady growth in inflation during September and October will help keep the SEP inflation outlook essentially unchanged from the September meeting. Some participants may revise up their rate forecasts for 2018 based on the positive economic outlook. However, given the upcoming leadership change and lingering uncertainty for the tax plan, other participants may choose to delay their revisions until next year. FOMC participants are less likely to revise their policy rate forecasts beyond 2018 materially given that they did not appear to change their views on the neutral rate nor on the appropriate degree of the policy rate overshooting its neutral level. At her last press conference as Fed Chair, Janet Yellen will likely note that inflation remains below the Committee’s objective on a 12-month basis but she may also highlight the pickup in economic growth.

The Bitcoin market is about to hit yet another milestone this Sunday when the CBOE launches of the first Bitcoin futures contract. Trading Bitcoin fu

The Bitcoin market is about to hit yet another milestone this Sunday when the CBOE launches of the first Bitcoin futures contract. Trading Bitcoin futures will effectively start at 5 pm Chicago time (2300 GMT), with the market only operating from Monday to Friday,  which makes open positions exposed to wild opening gaps next Sunday, with average moves of up to 20% not uncommon. A week later, on Dec 18th, it will be time for the CME (Chicago Mercantile Exchange) to launch the Bitcoin futures. In a recent article by the WSJ, concerns exist over the potential manipulation, hacks or glitches in Bitcoin, with critics seeing the introduction of the digital currency in futures trading as a gamble. In the last 7 days leading up to the futures listing, the exuberance around Bitcoin, which saw a rise towards the 20k mark in some exchanges, may have been partly caused by the expectations of larger pools of capital entering the market.   

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, notes that the recent rise in the US Dollar last week appears to be a func

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, notes that the recent rise in the US Dollar last week appears to be a function of position squaring in year-end dealings.Key QuotesThe US dollar rose against all the major currencies last week.  It seemed primarily a function of position squaring in year-end dealings.  Elevated expectations of US tax reform, some renewed talk of an infrastructure initiative, and data that gave no reason to doubt a Fed hike next week, helped bolster the dollar, after the downside momentum eased the prior week.   The Dollar Index rose every day last week, for the first time since February.  The 1.1% weekly advance was the most in six weeks.  The gains took the Dollar Index to the 61.8% retracement objective of the November decline, which is found near 94.15.  The five-day moving average moved above the 20-day average.   The MACDs and Slow Stochastics are trending higher.  A move below the 93.50 area would suggest a consolidative phase, while a move above 94.20 would suggest a return to the four-month highs set in late-October near 95.15.  The euro fell through the November uptrend line early last week and continued to trend lower.  It recorded six sessions without an advance, the longest such since November 2016.  The euro approached the 61.8% retracement objective of the November gains (~$1.1710), which also corresponds to the low from late last month. The technical indicators are moving lower.  The $1.1700 area is important support.  A break could spur a test on even more significant support in the $1.1550-$1.1600 band.  The US two-year premium over Germany increased by seven basis points to 2.54%, while the 10-year premium widened a couple basis points.  At 2.075, it is the widest in eight months.   The US 10-year premium over Japan was flat over the course of last week at 2.32%.   However, the dollar rose four of the five sessions and seven of the last nine sessions.  The dollar tested the 61.8% retracement of the November decline (~JPY113.25) a couple of time, but made it through there ahead of the weekend.  The next target is in the JPY113.80-JPY114.00 area.  The five-day average crossed above the 20-day average earlier in the week, and the technical indicators are moving higher.  Initial supported is pegged at JPY113.00.