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Market movers today

In the US, Markit PMIs for November are due for release. The large gap between Markit and ISM manufacturing narrowed in October and we expect this trend to continue (driven by both variables). Hence, we est imate that Markit PMI rose to 55.6. We est imate the service index stayed around its current level of 55.3.

German Ifo expectat ions figures are due for release today.

In Japan, November PMI figures for the export -heavy manufacturing sector are due out on Friday. The manufacturing sector has looked solid for more than a year now with indust rial product ion up 4.2% y/y and PMI just below 53.

In Sweden, October retail sales follow today. In Sweden, PPI data is released at 09:30 CET.

Selected market news

It has been a relatively quiet session overnight on financial markets as the US celebrated Thanksgiving. The sell-off in Chinese equities which send the CSI 300 index 2.5% lower yesterday has lost steam and trading in Asian markets is rather mixed this morning as Japan returns from holiday. Chinese equity indices are still lower this morning, but the negat ive momentum has eased. In Japan, the large equity indices trade higher and USD/JPY sees some support and trades slightly higher.

The minutes from the ECB meet ing on 26 October , released yesterday, revealed that ‘several members' (probably Benoît Coeuré, Francois Villeroy and Jens Weidmann) favoured delinking the forward guidance on QE from the requirement of a sustained rise in inflat ion and instead link it to the overall monetary policy stance (new QE purchases, QE stock and reinvestments and forward guidance in policy rates). If that view is becoming more prominent in the Governing Council over coming months, it would open up the possibility for the ECB to end the QE programme in 2018, even without a clear pick-up in inflat ion.

The latest PMI surveys From Europe and Japan indicate that the global business cycle is likely to underpin growth in coming quarters: Yesterday, PMI surveys from France, Germany and the aggregate euro zone came out very st rong and cont inue to paint an opt imist ic picture for growth in Europe in coming quarters. In Japan, the Nikkei manufacturing PMI index, released early this morning, rose to the highest level since March 2014 indicat ing that the manufacturing sector is likely to continue to support GDP growth.

Australia/New Zealand

ASX200 opened -0.1%, closed -0.1%; Financials Index -0.5%, Consumer Discretionary Index -0.4%, Resources Index -0.1%

Qantas -1.4%

Citi analysts speculate that the launch of Amazon’s site in Australia may come after Black Friday – US financial press

Australia Gold miner Resolute Mining announces gold hedge agreement which extends out to May 2010.

Australia sold A$500M in 2.00% Dec 2021 Bonds, avg yield 2.0281%, bid to cover 5.40x

Australia awards A$4B naval patrol contract to Germany’s Luerssen

New Zealand S&P NZX 50 closes +0.3%

NEW ZEALAND OCT TRADE BALANCE (NZD): -871M V -760ME; Imports: 5.43B v 5.0Be

China/Hong Kong:

Shanghai Composite opened -0.3% (following 2.3% decline prior session); Hang Seng opened +0.3%

Shanghai CSI 300 Index remains volatile, after dropping 2.9% on Thursday.

Hang Seng Information Technology Index -0.5% (Tencent -0.5%)

Alipay said to have ordered removal of certain loan products with high interest rates – Chinese Press

(CN) China news IPO review committee (set up in Oct) has reviewed 52 IPO applications, rejecting 16, suspending five and passing 31 – Xinhua

(CN) Fitch Report: China banks face continued regulatory scrutiny in 2018, bank credit growth seen decelerating; affirms stable outlook on sector

China 10-year bond yield -1bp

(CN) China Development Bank said to be not planning to conduct usual 10-year bond offering on Tuesday – US financial press; Expected to still issue up to CNY13B in 1, 3, 5 and 7 year notes.

(CN) PBoC OMO: Injects CNY50B v CNY270B injected in 7,14 and 63-day reverse repos prior; Net injection CNY20B v CNY100B injection prior

(HK) Hong Kong Dollar (HKD) money market rates rise: 1-week HKD Hibor up over 35bps to 0.79964%, overnight up over 45bps to 0.69143%

(HK) Chiyu Banking Corp, Bocom HK and Bank of East Asia have all raised Hong Kong Dollar (HKD) deposit rates ahead of year end – HK Press

(CN) PBoC sets yuan reference rate at 6.5810 v 6.6021 prior

Sinopec: Unipec unit Exec to import 6M tons of US crude in 2017, expects to double volume in 2018

Japan

Nikkei 225 opened -0.6% (holiday during prior session); closed +0.1%

Topix Iron & Steel Index -1%; Mitsubishi Materials has declined over 9% (confirm data falsification issue related to certain parts)

Automakers trade generally lower, Toyota -1%; Steel makers also generally lower, JFE -1.6%

Softbank +1%

30-year JGB yields have risen over 2bps: BoJ cuts over 25-year JGB purchases to ¥90B v ¥100B prior in daily operations

Japan Nov Prelim Nikkei Manufacturing PMI: 53.8 v 52.8 prior

(JP) Japan Fin Min Aso: Supplemental budget to invest in infrastructure

Korea

Kospi opened +0.1%

Korean Won (KRW) trades flat ahead of next Thursday’s (Nov 30th) Bank of Korea (Bok) rate decision. The central bank is expected to raise rates by 25bps to 1.50%, according to one poll.

Bank of Korea last raised rates in 2011

Other Asia

Malaysia:

Oct CPI below ests, but still above central bank’s 2-3% target: Malaysia Oct CPI Y/Y: 3.7% v 4.1%e (10th straight month above target range)

Ringgit (MYR) -0.3%

Taiwan

Taiex opened -0.1%, closed flat

AU Optronics +2.5%; The company expects to run plants at full capacity in Q1, says a local press report.

Taiwan Dollar +0.1%

North America

NYSE was closed on Thursday in observance of Thanksgiving holiday. The exchange to close early (at 13:00 GMT) on Friday.

M&A: Broadcom said to seek to break up pending merger between Qualcomm and NXP Semiconductor – US Press; Broadcom's CEO Hock Tan may be willing to improve the $70/share (cash and stock, $130B) offer for Qualcomm, under the condition that Qualcomm abandon its planned merger with NXP, says the article.

Europe

(DE) Germany Green Party said to call for Chancellor Merkel to enter coalition with the SPD Party – German Press

(EU) ECB’s Coeure (France): ECB deposit rate will stay at -0.4% for a long time; EU recovery is robust and homogeneous across countries and sectors - speaking in Paris; Internal demand driven Euro-area upturn is satisfying

(FR) ECB’s Villeroy (France): Support European supervisors initiative on NPLs; Bank of France is monitoring France corp debt levels - speaking at London School of Economics

(IE) Ireland Ruling Fine Gael Party: Stands behind Deputy PM, does not want election (**Note: Ireland's government was on the verge of collapse after the opposition Fianna Fail party whose votes PM Varadkar depends on to pass laws said it would seek to remove deputy PM Fitzgerald, according to a financial press report)

(UK) Ireland Foreign Min Coveney: there has not been enough progress yet on the Ireland border issue during Brexit negotiations

(UK) DMO to sell £400M of 4% 2060 Gilt in tender on Nov 28th

Lanxess: To establish high-performance plastics plant in Changzhou, China – German Press

Levels as of 01:00ET

Hang Seng +0.4%; Shanghai Composite -0.3%; Kospi +0.1%

Equity Futures: S&P500 +0.1%; Nasdaq100 flat, Dax +0.1%; FTSE100 +0.2%

EUR 1.1837-1.1859; JPY 111.19-111.50 ; AUD 0.7616-0.7632 ;NZD 0.6875-0.6894

Dec Gold flat at $1,291/oz; Jan Crude Oil +0.7% at $58.41/brl; Dec Copper +0.2% at $3.153lb

Daily Pivots: (S1) 147.68; (P) 148.07; (R1) 148.35; More...

No change in GBP/JPY's outlook. Corrective pattern from 152.82 is still in progress and could extend through 146.92 support. But we'd expect strong support from 61.8% retracement of 139.29 to 152.82 at 144.45 to contain downside and bring rebound. On the upside, break of 149.45 minor resistance will turn bias back to the upside for 151.92/152.82 resistance zone.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 139.29 will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

Daily Pivots: (S1) 131.37; (P) 131.62; (R1) 132.02; More....

No change in EUR/JPY's outlook. Correction from 134.48 is in progress and deeper fall is mildly in favor. Break of 131.16 will target 38.2% retracement of 114.84 to 134.48 at 126.97, which is close to 127.55 support. We'll look for support from there to bring rebound on first attempt. In any case, firm break of 134.48 is needed to confirm up trend resumption. Otherwise, near term risks remain on the downside.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will argue that the medium term trend has reversed and will turn outlook bearish for deeper fall back to 114.84/124.08 support zone at least.

Daily Pivots: (S1) 1.5506; (P) 1.5532; (R1) 1.5564; More....

EUR/AUD is staying in consolidation from 1.5656 and intraday bias remains neutral. Downside of retreat should be contained by 4 hour 55 EMA (now at 1.5473) and bring rise resumption. Above 1.5656 will extend the rally from 1.3624 and target 61.8% projection of 1.3624 to 1.5226 from 1.4949 at 1.5939 first. Nonetheless, sustained break of 4 hour 55 EMA will bring deeper fall back towards 1.5079 support instead.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top (2015 high) has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. We'll hold on to this bullish view as long as 1.5226 resistance turned support holds. Firm break of 1.6587 will resume long term rise from 1.1602 (2012 low).

Daily Pivots: (S1) 0.8873; (P) 0.8892; (R1) 0.8920; More...

Intraday bias in EUR/GBP remains neutral as the cross is staying in range of 0.8732/0.9032. With 0.9032 resistance intact, deeper decline is mildly in favor in the cross. Break of 0.8732 will resume the fall from 0.9305 and target 0.8303 key support level. However, on the upside, decisive break of 0.9032 will confirm completion of the decline from 0.9305. In such case, intraday bias will be turned back to the upside for retesting 0.9305 key resistance.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.1599; (P) 1.1619; (R1) 1.1647; More...

Intraday bias in EUR/CHF remains neutral as range trading continues. On the downside, considering bearish divergence condition in 4 hour MACD and daily MACD, decisive break of 1.1541 will confirm topping and turn near term outlook bearish for 1.1355 key support. Nonetheless, on the upside, break of 1.1721 resistance will resume recent up trend towards 1.2 key level.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1355 support holds. However, break of 1.1355 will indicate medium term topping. In that case, EUR/CHF should head back to 55 week EMA (now at 1.1158) and possibly below.

Daily Pivots: (S1) 0.7604; (P) 0.7621; (R1) 0.7639; More...

AUD/USD's recovery from 0.7531 is still in progress and further rise could be seen. But upside should be limited below 0.7729 resistance and bring fall resumption. Break of 0.7531 will resume the whole decline from 0.8124 and turn bias to the downside for next key cluster level at 0.7322/8. However, considering bullish divergence condition in 4 hour MACD, break of 0.7729 will indicate near term reversal and bring stronger rebound back to 0.7896 resistance and above.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8049). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7729 near term resistance holds.

Daily Pivots: (S1) 1.2683; (P) 1.2704; (R1) 1.2735; More....

USD/CAD is staying in the pull back from 1.2916 deeper fall could still be seen. But downside should be contained by 1.2598 resistance turned support and bring rebound. Above 1.2836 will target 1.2916 first. Further break of 1.2916 will resume whole rally from 1.2061 to 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Daily Pivots: (S1) 111.06; (P) 111.21; (R1) 111.37; More...

As noted before, whole rebound form 107.32 should have finished at 114.73. Intraday bias in USD/JPY remains on the downside for 61.8% retracement of 107.31 to 114.73 at 101.14. For the moment, we're still favoring the case medium term corrective pattern from 118.65 has completed at 107.31 already. Hence, we'll looking for bottoming below 101.14 to bring another rise. On the upside, break of 112.71 resistance will indicate that the fall from 114.73 is completed and turn bias back to the upside.

In the bigger picture, medium term rise from 98.97 (2016 low) is not completed yet. It should resume after corrective fall from 118.65 completes. Break of 114.49 resistance will likely resume the rise to 61.8% projection of 98.97 to 118.65 from 107.31 at 119.47 first. Firm break there will pave the way to 100% projection at 126.99. This will be the key level to decide whether long term up trend is resuming. However, firm break of 111.64 support will dampen this view and turn focus back to 107.31 instead.