Technical Analysis

ForexLive Asia-Pacific FX news wrap: Chinese stocks higher, USD lower

  • Cryptocurrency exchange Swyftx will lay off nearly half its staff
  • Foxconn expects full production to resume at Covid-hit China plant in late Dec, early Jan
  • Morgan Stanley upgrades China equities (MSCI China) to overweight
  • The RBA is expected to hike the Australian cash rate by 25bp on Tuesday – policy preview
  • The Federal Reserve FOMC blackout period has begun – no Fed speakers today
  • ICYMI: China’s Xi said COVID in China mainly Omicron, was less lethal, allows more openess
  • China Caixin Services PMI for November 46.7 (prior 48.4)
  • Goldman Sachs on China easing COVID restrictions: “preparations may last a few months”
  • PBOC sets USD/ CNY reference rate for today at 7.0384 (vs. estimate at 7.0368)
  • Australian monthly inflation gauge. Headline +1% m/m and Core +0.7% m/m
  • UK analysts:”Britain is in stagflation … lost decade of growth if action isn’t taken”
  • Australian Q3 Inventories 1.7% q/q (expected 1.0%, prior 0.3%)
  • Japan data – Jibun Bank PMI Services for November, final is 50.3 (prior 53.2)
  • New Zealand data – NZ export prices plunged 9.4% (in NZD terms) in November
  • UBS says Russian oil production will fall as the EU import ban takes effect
  • Summers: the Fed will likely need to raise interest rates more than the market anticipates
  • ICYMI – France’s credit outlook was downgraded to negative from stable by S&P
  • US Intelligence says Chinese President Xi Jinping is unwilling to accept Western vaccines
  • Australian S&P / Markit Services PMI for November remains contracting at 47.6 (prior 47.2)
  • Australia’s construction sector PMI rises in November but remains in contraction at 48.2
  • Russia’s Novak says will not sell oil to price cap nations. Womp womp.
  • Weekend – ECB’s Villeroy says he is in favour of a 50bp rate hike on December 15
  • Trade ideas thread – Monday, 5 December 2022
  • Monday morning open levels – indicative forex rates – 05 December 2022
  • DOGE coin technical analysis: Bullish.
  • OPEC+ holds production unchanged, as expected
  • Bank of England’s Dhingra on inflation: “we’re not there at a wage-price-spiral point yet”
  • FT reports that crypto exchange Gemini is trying to recover US$900m from lender Genesis
  • Formula One has canceled the 2023 Chinese Grand Prix – citing COVID
  • Beijing and Shenzhen have loosened more Covid-19 restrictions
  • The Weekend Forex Report: A look back and ahead to the Dec 5, 2022 trading week
  • Week Ahead: highlights include OPEC+, RBA, BoC, China Trade/CPI, Uni. of Mich.

USD traded a little higher in the very early Asian hours today. The
‘gap’ higher for the US dollar soon reversed as more Asian
markets became active and currencies extended their gains nearly
across the board. CAD, GBP, EUR, AUD, NZD, even gold – all higher.
Yen is a bit of a laggard its not a lot net changed on the session.

China, easing back of COVID restrictions continued incrementally.
Poor PMI data was shrugged of as the optimistic outlook gained.
Offshore and onshore yuan gained against the dollar also.

the weekend OPEC+ confirmed no change to output policy. While on oil,
Russian Deputy Prime Minister Alexander Novak said over the weekend
that Russia would not sell oil to countries participating in the oil
price cap. Oil initially rose on the reopening of futures trade on
Sunday evening (US time) but has since fallen back.

data today showed headline inflation rising once again, with core
(trimmed mean) steady at just under 5% y/y, well above the RBA target.
This data is from a privately conducted survey that is a decent guide
to official data. Also from Australia was data on wages in Q3, coming
in at +11% y/y, which is well above the inflation rate. This has the
potential to set up a wage-price spiral. The Reserve Bank of
Australia meet tomorrow with a 25bp hike to the cash rate widely
expected. The Bank says its in a ‘wait and see’ period as it
assesses the previous rate hikes’ impact upon the economy. I’ll
be interested if they say anything at all about the surge in wages.
Stay tuned. The Reserve Bank of Australia statement is due at 0330
GMT on Tuesday, 6 December 2022.

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