TradeTheNews.com Staff
TradeTheNews.com
Asia market update: Yuan falls to 7.31 after weakest fix since Sept 2023; Focus on jobs: US Oct JOLTs tonight and Nov NFP on Friday.
General trend
- China PBOC kept the Yuan fix stronger than 7.20, but only just, with the weakest fix since Sept 2023 and well below market level of 7.28. China offshore Yuan soon hit the 7.30 handle for the first time since July 3rd within minutes of the fix. China state-owned banks seen selling USD, buying onshore Yuan around 7.30 level, keeping the lower limit for the day to 7.31 thus far.
- On a generally firmer USD, USD/JPY retook the 150 handle.
- US equities saw fresh record highs after stronger than expected US Nov ISM Manufacturing PMI data. The mood spilled over to Asia, where the Nikkei +2.3% and Kospi +1.6% outperformed with all of Asia in the green.
- Focus this week will be on jobs out of the US, with Oct JOLTS tonight leading into Nov Non-Farm Payrolls on Friday night Asia time.
- Australia Q3 Current Account came in at the lowest since 2018 and the 6th straight quarterly deficit, reflecting continued falls in Australia’s terms of trade as export prices for iron ore and coal fell for the third quarter in a row due to lower global demand.
- South Korea Nov CPI fell more than expected, although going forward the Bank of Korea said it expects CPI to rise to "near 2%" on base effects.
- A financial press poll sees the chances of a Bank of Japan hike of total 25 bps by January at 87.0%, vs 83.5% last Friday. (Next BOJ decision Dec 19th, followed by January).
- Front page of China Securities Times called for further supportive economic, monetary and fiscal policy in 2025.
- Further warnings of Chinese overcapacity with Thailand's Central Bank Governor warning that Thailand's Manufacturing sector is being impacted by Chinese goods.
- More evidence of "The Trump Effect" with Malaysia's Dep Trade Minister saying they are ready to discuss with US the potential 100% tariff on BRICS' exports (in response to weekend threat by Pres-elect Trump via social media post).
- Fast Retailing Nov Sales at ~1:30 am EST.
- US equity FUTs +0.1% during the Asia session.
Looking ahead (Asian time zone)
- Tue Dec 3rd (Tue night US Oct JOLTs).
- Wed Dec 4th AU Q3 GDP, CN Caixin Nov Services PMI, (Wed night US Nov ISM Services PMI, Fed Chair Powell).
- Thu Dec 5th AU Trade Balance, KR Q3 GDP Final, BOJ Nakamura, (Thu night US Oct Trade Balance).
- Fri Dec 6th AU Home Loans, RBI Rate Decision, (Fri eve EU Q3 GDP, Fri night US Nov NFP, US Dec Michigan Consumer Sentiment).
- Sat Dec 7th CN Trade Balance.
Holidays in Asia this week
- Thu Dec 5th Thailand.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.1% at 8,454.
- Australia Q3 Current Account (A$): -14.1B v -10.9Be (Lowest since 2018 and 6th straight quarterly deficit).
- Australia govt welcomes China's lifting of remaining suspensions on two meat processors - financial press.
- New Zealand Q3 Terms of Trade Index Q/Q: 2.4% v 1.3%e.
- New Zealand Fin Min Willis: Fiscal deterioration hard to turn around.
China/Hong Kong
- Hang Seng opens +0.2% at 19,585; Shanghai Composite opens +0.1% at 3,366.
- China offshore Yuan hits 7.30.
- China state-owned banks seen selling USD, buying onshore Yuan around 7.30 level - traders.
- China reportedly discovers world's largest gold deposit, with potential worth over £63B - Chinese state media (update).
- China said to require "more supportive economic policy" for 2025 - front page of China Securities Times.
- (UK) Chancellor Reeves to meet China counterpart for talks in middle of Jan - UK press [overnight update].
- US confirms tightened China curbs on AI memory and semiconductor tools; New rules affect 27 types of chip design and fabrication tools; US to sanction 140 Chinese entities; curb US, foreign-made HBM – press [overnight update].
- TTN Reminder: On Dec 1st, China MOFCOM put into effect new dual-use item export control list, creating a list of items with military uses that face export restrictions; List does not involve adjustment to specific scope of export controls [overnight update].
- China PBOC sets Yuan reference rate: 7.1996 v 7.1865 prior {weakest since Sept 11, 2023).
- China PBOC Open Market Operation (OMO): Injects CNY51B in 7-day reverse repos; Net drains CNY248B v net drains CNY216B prior.
Japan
- Nikkei 225 opens +0.6% at 38,748.
- Japan Nov Monetary Base Y/Y: -0.3% v -0.3% prior.
- Japan sells ¥2.6T VS. ¥2.6T indicated in 10-year JGB bonds; avg yield: 1.0840% V 0.9970% prior; bid-to-cover: 3.12X V 3.13X prior.
- BoJ's quarterly survey: The level of dysfunction in Japan’s government bond market eased in November from three months earlier [overnight update].
Korea
- Kospi opens +0.7% at 2,472.
- South Korea NOV CPI M/M: -0.3% V -0.1%E; Y/Y: 1.5% V 1.7%E.
- Bank of Korea (BOK) Sees CPI to rise to "near 2%" on base effects - financial press.
- Follow up: South Korea National Pension Fund (NPS) said to discuss FX hedging ratio with South Korea MOF - press.
- South Korea starts review on Chinese steel plate tariffs - Korean press.
Other Asia
- Malaysia Dep Trade Min: Ready to discuss with US potential 100% tariff on BRICS' exports.
- Thailand Fin Min Pichai: Thailand lacks investment but has 'high' liquidity; wants to see 'weak' Baht currency (THB).
- Thailand Central Bank (BOT) Gov Sethaput: Manufacturing sector being impacted by Chinese goods - financial press.
- Singapore Nov Purchasing Managers Index (PMI): 51.0 v 50.8 prior [overnight update].
North America
- (US) Pres-elect Trump to travel to Paris, France this Saturday - Truth Social post.
- (US) SEMI: Global semiconductor equipment billings increased 1h9% year-over-year to US$30.38 billion in the third quarter of 2024, while quarter-over-quarter billings registered 13% growth during the same period.
- (US) Adobe Analytics: Expects consumers to spend $13.2-13.5B on Cyber Monday in US (v $12.4B y/y, +7.7% implied using midpoint).
- (CA) Canada Nov Manufacturing PMI: 52.0 v 51.1 prior (3rd month of expansion).
- (FR) France PM Barnier: France must have a budget for 2025; Confirms have decided to use constitutional powers [Article 49.3] to push social security bill without vote.
- (US) NOV FINAL S&P MANUFACTURING PMI: 49.7 V 49.0E; Notes rebound in business optimism leads to renewed job creation; Optimism about the year ahead has improved to a level not beaten in two and a half years; Note that November’s fall in overall new orders was the smallest seen over the past five months.
- (US) NOV ISM MANUFACTURING: 48.4 V 47.6E; New Orders: 50.4 v 47.1 prior; Prices Paid: 50.3 v 56.0e.
- (US) OCT CONSTRUCTION SPENDING M/M: 0.4% V 0.2%E.
- (US) Fed's Waller (voter for 2024 and 2025): Would lean toward supporting a cut in Dec, but worries about inflation.
- (MX) Mexico Nov IMEF Manufacturing Index: 48.3 v 47.9e.
Europe
- (UK) Nov British Retail Consortium (BRC LFL Sales Y/Y: -3.4% v 0.6%e.
- (UR) NATO Sec Gen Rutte warned Pres Elect Trump of dire threat to US if Ukraine is pushed into a bad peace deal – FT.
- (ES) Spain Nov New Car Sales Y/Y: +6.4% v -7.2% prior - Anfac.
- (FR) French PM Barnier opts to trigger article 49.3 to pass 2025 social security budget bill (PLFSS) without a vote (as speculated); opens up no-confidence vote - Press.
- (FR) France's Le Pen Party Chief (far-right): Urges PM Barnier to accept National Rally party's demands regarding indexation of pensions to inflation; National Rally to censure PM if no concessions on pensions.
- (FR) France PM Barnier: France must have a budget for 2025; Confirms have decided to use constitutional powers [Article 49.3] to push social security bill without vote.
- (GR) Greece govt tells investors it has no plans for extra tax on banks.
- (IT) Italy PM Meloni: Govt is open to use special powers on Unicredit-BPM deal.
- (UR) NATO Sec Gen Rutte warned Pres Elect Trump of dire threat to US if Ukraine is pushed into a bad peace deal - FT.
Levels as of 00:20 ET
- Nikkei 225 +2.3%, ASX 200 +0.6%, Hang Seng +0.2%; Shanghai Composite +0.1%; Kospi +1.5%.
- Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; Dax +0.1; FTSE100 -0.1%.
- EUR 1.0482-1.0502; JPY 149.50 -150.24; AUD 0.6455-0.6482; NZD 0.5864-0.5889.
- Gold +0.1% at $2,661/oz; Crude Oil +0.1% at $68.15/brl; Copper -0.4% at $4.1245/lb.
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