Sample Category Title

General trend

• Will the current pace of Aussie job gains be sustained going forward?
• RBA Gov Lowe commented on the 3 options for the central bank’s bond purchase program, also said would like to see full employment and 4.0% wage growth.
• Australia Treasury issued budget statement: Cut GDP forecasts, sees inflation within the RBA’s 2-3% target, sees FY24/25 wage growth above 3%.
• Australia New South Wales (highest population state) reports record 1,742 virus cases.
• Commodity currencies trade generally lower amid Australia events and US Fed.
• Bank of Korea (BOK) Gov held briefing on H2 CPI.
• Precious metals have remained higher in Asia.
• US equity FUTs trade slightly higher after gains on Wed.
• Nikkei 225 has remained higher by >1%.
• Hang Seng has remained lower; TECH index hit a fresh record low; Property index traded slightly higher during the morning session, China officials said to have met with certain property developers on Wed.
• Shanghai Composite traded slightly higher during the morning session (+0.3%).
• S&P ASX 200 has remained lower following the dip at the open; CSL weighed on the healthcare index; Resources and Energy indices also declined.
• Singapore property developers declined modestly on real estate curbs.
• Central banks in Taiwan, Philippines and Indonesia are expected to leave rates unchanged later today.
• China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.
• BOJ decision is due on Fri (Dec 17th)
• Australia to release the annual weight update of the CPI and Living Cost Indexes on Fri.
• Companies due to report during the NY morning include Accenture, Jabil.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened +0.1%.
• (AU) Reserve Bank of Australia (RBA) Gov Lowe: Third option is to halt bond purchases in Feb if economic data better than expected; Underlying inflation expected to hit 2.5% during 2023; Conditions for rate hike will not be met in 2022- Speech "The RBA and the Australian Economy ".
• (AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +366.1K V +200.0KE; UNEMPLOYMENT RATE: 4.6% V 5.0%E.
• (AU) AUSTRALIA DEC CONSUMER INFLATION EXPECTATION: 4.8% V 4.6% PRIOR (9-year high).
• (AU) Australia Treasurer Frydenberg issues Mid-Year Economic and Fiscal Outlook (MYEFO): Cuts GDP outlooks, raises CPI outlook, budget to remain in decreasing deficit for next few years.
• (NZ) NEW ZEALAND Q3 GDP Q/Q: -3.7% V -4.1%E; Y/Y: -0.3% V -1.4%E.
• QAN.AU Guides H1 (A$) EBITDA -300M to -250M, underlying EBIT great than -1.1B.
• (AU) Australia Council of Financial Regulators (CFR) Quarterly Statement: Key items of discussion included housing market risks and the Council's work on payments and crypto-assets, cyber security and the financial risks related to climate change.
• WSA.AU To be acquired by IGO at A$3.36/shr for A$1.1B.
• MSB.AU Announces FDAs OTAT agree to Primary Endpoint for Back Pain, to conduct an additional US Phase 3 trial which may support submissions for potential approval in both the US and EU.

Japan

• Nikkei 225 opened +1.4%.
• (JP) JAPAN DEC PRELIMINARY PMI MANUFACTURING: 54.2 V 54.5 PRIOR (11th consecutive expansion).
• (JP) Japan Econ Min Yamagiwa: No need to change GDP forecast after overstated construction data.
• (JP) Japan Nov Trade Balance: -¥954.8B v -¥600.3Be; Adj Trade Balance: -¥486.8B v -¥302.8Be.
• (JP) Japan Investors Net Buying of Foreign Bonds: +¥457.0B v -¥1.18T prior; Foreign Net Buying of Japan Stocks: -¥602.9B v +¥2.01T prior.
• (JP) Japan MoF sells ¥1.2T v ¥1.2T indicated in 0.500% 20-year JGBs, Avg Yield: 0.4520% v 0.4640% prior, bid-to-cover: 3.66x v 3.78x prior.

Korea

• Kospi opened +0.8%.
• (KR) Bank of Korea (BOK) Gov Lee: See CPI staying above 2% for quite some time amid a solid economic recovery and increasing price pressures from global supply bottlenecks - bi-annual inflation review.
• (KR) South Korea Fin Min Hong: Targeting low 3.0% GDP growth in 2022.
• (KR) Bank of Korea (BOK): $60B currency swap agreement with US to expire on Dec 31st, as scheduled; financial and economic situations at home and abroad remain stable.
• (KR) South Korea PM announces increased COVID restrictions, re-implements 9PM curfew on all restaurants and businesses, limits private gatherings to 4 people.

China/Hong Kong

• Hang Seng opened -0.6%; Shanghai Composite opened 0.0%.
• (CN) China Govt said to be increasing the number of minority stakes it is taking in private companies, especially those that have large amounts of key data – press.
• (HK) Hong Kong Monetary Authority (HKMA): Money markets in Hong Kong continue to operate smoothly.
• (CN) China PBOC sets Yuan reference rate: 6.3637 v 6.3716 prior.
• (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net CNY0B v Net CNY0B prior.
• Another press report saying China loan prime rates (LPRs) may be lowered during Dec, cites analysts - Chinese press.
• (CN) China State Planner (NDRC): Approved CNY261.5B in investments during Nov; Has created list of Special bond funded projects in 2022.

North America

• In Oct Japan Total Holdings of US Treasuries: $1.32T v $1.30T prior, China Total holding of US Treasuries: $1.065T v $1.05B prior.
• TCOM Reports Q3 (CNY) 0.81 v 2.32 y/y, Rev 5.3B v 5.5B y/y.
• (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% RANGE; AS EXPECTED; DOUBLES PACE OF TAPER TO $30B PER MONTH; OFFICIALS SEE THREE RATE HIKES IN 2022 - Officials see three rate increases in 2022, three more hikes in 2023.
• (US) Fed Chair Powell: Economic developments and outlook warranted faster bond taper; Elevated inflation was reason for accelerating taper - post rate decision press conference.

Europe

• (FR) France Pres Macron: It's entirely possible France introduces mandatory COVID vaccinations.

Levels as of 00:15ET

• Hang Seng -0.6%; Shanghai Composite +0.3%; Kospi +0.2%; Nikkei225 +1.9%; ASX 200 -0.4%.
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.2%; FTSE100 +0.1%.
• EUR 1.1299-1.1281; JPY 114.25-114.00; AUD 0.7181-0.7146; NZD 0.6791-0.6758.
• Commodity Futures: Gold +1.0% at $1,782/oz; Crude Oil +1.0% at $71.55/brl; Copper -0.1% at $4.24/lb.

Daily Pivots: (S1) 113.70; (P) 113.98; (R1) 114.33; More...

USD/JPY's rebound from 112.52 resumed by breaking 113.94 minor resistance and intraday bias is back on the upside for retesting 115.51 high. Firm break there will resume whole up trend from 102.58 and target 118.65 key long term resistance. On the downside, below 113.21 minor support will now likely resume the correction from 115.51 through 112.52 support.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high) on resumption. However, firm break of 109.11 structural support will argue that the trend might have reversed and bring deeper fall to 107.47 support and possibly below.

Dollar initially surged after Fed decided to double tapering pace and indicated there could be as many as three rate hikes next year. Nevertheless, the rally attempted was choked off by strong risk-on rally in stocks. Investors seemed to be relieved that firstly, Fed is still cautious on the developments with Omicron. Secondly, the uncertainty regarding pace of rate hike was removed. The greenback is still the strongest was for the week so far, but is kept inside last week's range except versus Yen and Canadian. Focus will turn to BoE and ECB policy decisions today. SNB will be featured too be it's more likely a non-event.

Suggested readings on Fed, ECB and BoE:

• Hawkish Fed Anticipates Three or More Rate Hikes Next Year
• FOMC Increases Tapering, Sees 3 Rate Hikes In 2022 AND 2023
• Fed Research Review: Catching Up to Reality – First Rate Hike Likely in May
• ECB Preview – Phase-Out of PEPP by March as Scheduled
• ECB Meeting: Shadow Tapering
• ECB Meeting: High Inflation Still Transitory Or Time To Talk Tapering?
• BOE Preview – Delaying Rate Hike to February 2022
• BoE Preview: Will The BoE Push Back To February?

Technically, USD/JPY's break of 133.94 minor resistance is sign a progress, as rebound from 112.52 is resuming towards 115.51 high. Yet, we'd maintain that the greenback will need to move out from near term ranges to confirm it's direction. To be specific, the ranges to breakout from are 1.1185/1.3820 in EUR/USD, 1.3158/1.3351 in GBP/USD, 0.9156/0.9372 in USD/CHF and 112.52/115.51 in USD/JPY.

Gold spiked lower after Fed, but quickly recovered

Gold spiked lower to 1752.32 after Fed decided to double tapering pace while the new projections indicated three rate hikes next year. Yet, Gold quickly recovered and there was no follow through buying in Dollar.

For now, further fall will remain in favor in Gold as long as 1792.94 resistance holds. Break of 1752.32 will resume the decline from 1877.05 to 1721.46 first. Break there will target key long term support zone at 1676.55/1682.60.

However, strong break of 1792.94 will now bring sustained trading above 55 day EMA. Considering bullish convergence condition in 4 hour MACD too, that would signal complete of fall from 1877.05 and bring stronger rise back towards this resistance.

Japan exports rose 20.5% yoy in Nov, imports surged 43.8% yoy to record

Japan's exports rose 20.5% yoy to JPY 7367B in November. That's the ninth straight months of increase, helped by 4.1% rise in auto shipments. Exports to China rose 155.0% yoy. Imports rose 43.8% yoy to JPY 8322B. That's the largest amount on record since 1979, jacked up by 144.1% yoy rise in fuels. Trade surplus came in at JPY 955B.

In seasonally adjusted terms, exports rose 5.3% mom to JPY 7385B. Imports rose 5.9% mom to 7872B. Trade balance reported a deficit of JPY -487B.

Japan PMI manufacturing dropped to 53.3, recovery sustained with softening momentum

Japan PMI Manufacturing dropped from 54.0 to 53.3 in December. PMI Services dropped from 53.0 to 51.1. PMI Composite dropped from 53.3 to 51.8.

Annabel Fiddes, Economics Associate Director at IHS Markit, said: "The latest Flash PMI data showed that the Japanese private sector recovery was sustained in December, rounding off the best quarterly performance since Q4 2018. However, both manufacturers and services companies signalled softer rates of output and new order growth compared to November, to suggest a softening of momentum."

Australia employment rose 366.1k in Nov, unemployment dropped sharply to 4.6%

Australia employment rose 366.1k in November, above expectation of 200k. Full-time employment rose 128.3k. Part-time employment rose 237.8k. Unemployment rate dropped sharply from 5.2% to 4.6%, better than expectation of 5.0%. Participation rate also jumped 1.4% to 66.1%. Monthly hours worked in all job rose 4.5% mom.

Also released, PMI manufacturing dropped from 59.2 to 57.4 in December. PMI Services dropped from 55.7 to 55.1. PMI Composite dropped from 55.7 to 54.9.

New Zealand GDP contracted -3.7% qoq in Q3, better than expectation

New Zealand GDP dropped -3.7% qoq in Q3, better than expectation of -4.3% qoq. For the year, GDP contracted -0.3% yoy, versus expectation of -1.6% yoy. Services industries dropped -2.7% qoq. Goods-producing industries dropped -7.3% qoq. Primary industries dropped -3.1% qoq.

USD/JPY Daily Outlook

Daily Pivots: (S1) 113.70; (P) 113.98; (R1) 114.33; More...

USD/JPY's rebound from 112.52 resumed by breaking 113.94 minor resistance and intraday bias is back on the upside for retesting 115.51 high. Firm break there will resume whole up trend from 102.58 and target 118.65 key long term resistance. On the downside, below 113.21 minor support will now likely resume the correction from 115.51 through 112.52 support.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high) on resumption. However, firm break of 109.11 structural support will argue that the trend might have reversed and bring deeper fall to 107.47 support and possibly below.

Economic Indicators Update

Gold spiked lower to 1752.32 after Fed decided to double tapering pace while the new projections indicated three rate hikes next year. Yet, Gold quickly recovered and there was no follow through buying in Dollar.

For now, further fall will remain in favor in Gold as long as 1792.94 resistance holds. Break of 1752.32 will resume the decline from 1877.05 to 1721.46 first. Break there will target key long term support zone at 1676.55/1682.60.

However, strong break of 1792.94 will now bring sustained trading above 55 day EMA. Considering bullish convergence condition in 4 hour MACD too, that would signal complete of fall from 1877.05 and bring stronger rise back towards this resistance.

Japan's exports rose 20.5% yoy to JPY 7367B in November. That's the ninth straight months of increase, helped by 4.1% rise in auto shipments. Exports to China rose 155.0% yoy. Imports rose 43.8% yoy to JPY 8322B. That's the largest amount on record since 1979, jacked up by 144.1% yoy rise in fuels. Trade surplus came in at JPY 955B.

In seasonally adjusted terms, exports rose 5.3% mom to JPY 7385B. Imports rose 5.9% mom to 7872B. Trade balance reported a deficit of JPY -487B.

Japan PMI Manufacturing dropped from 54.0 to 53.3 in December. PMI Services dropped from 53.0 to 51.1. PMI Composite dropped from 53.3 to 51.8.

Annabel Fiddes, Economics Associate Director at IHS Markit, said: "The latest Flash PMI data showed that the Japanese private sector recovery was sustained in December, rounding off the best quarterly performance since Q4 2018. However, both manufacturers and services companies signalled softer rates of output and new order growth compared to November, to suggest a softening of momentum."

Full release here.

Australia PMI manufacturing dropped from 59.2 to 57.4 in December. PMI Services dropped from 55.7 to 55.1. PMI Composite dropped from 55.7 to 54.9.

Jingyi Pan, Economics Associate Director at IHS Markit, said: "The Australian economy maintained growth at a strong rate in December... Supply issues meanwhile persisted, with lead times continuing to lengthen and reports of shortages persisting. This led to a surge in price pressures for private sector firms and affected business confidence... The climb in employment levels was also a positive sign with private sector firms across both the manufacturing and service sectors hiring at faster rates in December."

Full release here.

Short-term Elliott wave view in CADJPY suggests the decline from October 21, 2021 peak is unfolding as a zigzag Elliott Wave structure. Down from October 21 peak, wave ((A)) ended at 87.82 and rally in wave ((B)) ended at 90.36. The internal subdivision of wave ((B)) unfolded as an expanded Flat structure. Up from wave ((A)), wave (A) ended at 89.12, dips in wave (B) ended at 87.68. Pair then extends rally higher in wave (C) to 90.36. In the 45 minutes chart below, we can see the internal subdivision of wave (C) in 5 waves. Up from wave (B), wave 1 ended at 88.19 and wave 2 ended at 87.88. Pair then resumes higher in wave 3 towards 89.92, pullback in wave 4 ended at 89.47, and final leg higher wave 5 ended at 90.3. This completed wave ((B)) in higher degree.

Pair has turned lower in wave ((C)), but it still needs to break below the previous low at 87.68 to validate the view. Down from wave ((B)), wave 1 ended at 89.09, and rally in wave 2 ended at 89.6. Pair then resumes lower in wave 3 towards 88.37, rally in wave 4 ended at 88.69, and final leg lower wave 5 ended at 88.05. This completed wave (1) of ((C)). Wave (2) rally is now in progress to correct cycle from December 8, 2021 peak before the decline resumes. Rally should unfold in the sequence of 3, 7, or 11 swing and as far as pivot at 90.36 high remains intact, expect pair to resume lower.

CADJPY 45 Minutes Elliott Wave Chart

Australia employment rose 366.1k in November, above expectation of 200k. Full-time employment rose 128.3k. Part-time employment rose 237.8k. Unemployment rate dropped sharply from 5.2% to 4.6%, better than expectation of 5.0%. Participation rate also jumped 1.4% to 66.1%. Monthly hours worked in all job rose 4.5% mom.

ABS said: "The easing of restrictions in both New South Wales and Victoria had a large influence on the national figures, with employment in the two states increasing by 180,000 people and 141,000 people between October and November. Employment in those jurisdictions in November was only 52,000 people and 4,000 people below May, having fallen by 250,000 people and 145,000 people during the lockdowns."

Full release here.

• GDP fell by 3.7% in the September quarter, following a 2.4% rise in June.
• The details point to Covid-related activity restrictions as the main driver for the decline in economic output, rather than weakness in demand.
• Today’s results don’t change the outlook for either monetary or fiscal policy. Activity is expected to bounce back in the coming quarters, as Covid restrictions are eased and pent-up demand is unleashed.

New Zealand's GDP fell by 3.7% in the June quarter. The result was weaker than our forecast of a 3% fall, but well within the range of possibilities in this Covid-affected environment. The average market forecast was similar at around 4%.

Today's release doesn't alter our view on the economy as a whole. Activity is still expected to bounce back over the next few quarters, driven by pent-up demand. However, we won't see the same V-shaped recovery as last year, as parts of the country have still been under Covid restrictions throughout the December quarter.

Similarly, we don't think that these results challenge the outlook for monetary or fiscal policy. While both the Reserve Bank and the Treasury had assumed a fall of around 6-7%, their forecasts were finalised in November, before many of the inputs for GDP were available. And while both assumed a sharp decline, they also expected a full rebound in the following quarters – and that aspect of their forecasts won't need to change.

Details

The 3.7% fall in the September quarter followed a strong 2.4% rise in the June quarter. What surprised us was the magnitude rather than the drivers in today's results. Putting it together, the level of GDP is still 0.6% higher than it was at the end of 2019, before the pandemic. Given the headwinds that have been buffeting the economy (including the loss of international tourist dollars) that resilience points to ongoing firmness in underlying demand.

The sectors that saw the largest decline in the September quarter were customer-facing services, where shutdowns and social distancing restrictions were a particularly large drag on activity. That includes retail trade and accommodation, arts and recreation, and other personal services. These were also the biggest source of uncertainty in our forecasts, as Stats NZ has had to use alternative data sources and methods to capture the lockdown impact for these sectors in particular.

Sectors that were relatively unaffected by Covid restrictions in the September quarter were mostly in line with our forecast. That includes financial services, rental hiring and real estate services and utilities. Professional services in general fared much better than the lockdown in 2020. While that was in part due to the country as a whole spending less time in Alert Level 4 than in 2020, businesses were also better prepared to work remotely this time. As a result, the reimposition of lockdown conditions was less of a brake on activity.

Today's results also included revisions from Stats NZ as part of the usual annual benchmarking exercise (which accounts for better data on economic conditions becoming available over time). Those revisions have left us with a slightly stronger picture for GDP over the past year, which is consistent with indications that the New Zealand economy as a whole has been fairly resilient to the Covid outbreak, those there are obviously some sectors which continue to wrestle with tough operating conditions.

Outlook

While today's result was a little lower than our forecast, the economy has come through the Delta outbreak (thus far) in better shape than we feared back in August. Businesses are now adapting to operating with health restrictions. The labour market remains in good health and domestic demand has remained robust. Spending levels having picked up as the Alert Level has been dialled down.

Overall, we continue to expect a return to firm levels of demand over the coming year. That's despite the ongoing headwinds like the closure of the border and the uncertainty stemming from the emergence of the Omicron variant. Importantly, that also means that we don't expect any relief from the strong capacity and inflation pressures that the economy is confronting