Sample Category Title

UK unemployment rate dropped from 4.3% to 4.2% in the three months to October, matched expectations. Employment rate rose 0.2% to 75.5%. Average earnings including bonus rose 4.9% 3moy, above expectation of 4.5%. Average earnings excluding bonus rose 4.3% 3moy, above expectation of 4.0%.

Total employment rose 257k to 29.4m in November. It's also 424k above pre-coronavirus level in February 2020.

Full release here.

Market movers today

• In Sweden, we expect November CPIF and CPIF excl. Energy to print 3.3 % yoy and 1.7 % yoy, respectively.
• In the US, the producer price inflation is more in focus than normally to gauge whether the strong inflation pressures in the US economy are starting to abate.
• The Hungarian central bank is expected to hike rates further by 40bps to 2.50% and hence continue its vivid hiking cycle which has been ongoing since May this year.
• Overnight we get Chinese industrial production and retail sales, which are expected to show a modest moderation in the growth rate relative to November last year.

The 60 second overview

Omicron concerns hit commodity prices: In commodities, crude oil extended a retreat in part on the possible obstacles to global reopening if omicron leads to wider mobility curbs. Other raw material prices also weakened, spurring declines in commodity currencies, led by the Australian dollar but also the Norwegian kroner got hit.

EU stand-off over rule of law issues: Yesterday, French president Emmanuel Macron met with leaders of Hungary, Poland and Czech Republic to discuss deep-seated issues relating to rule-of-law. The French president said after the meeting that he wants to move forward with resolving the stand-off with Poland and Hungary during the first half of next year, when France holds the rotating EU presidency through "dialogue". However, postponing the issue until spring also raises the possibility that the EU Court of Justice will rule that the Eastern European countries need to adhere to the Rule-of-Law principles in order to receive EU funds, which have been held back unofficially by EU from these countries so far. The Polish and Hungarian currencies weakened on the back of the news (although also driven by weakening global risk sentiment).

Equities: Risk-off re-emerged on Monday, with equities lower and defensives beating the tape in a slow session. Yield curve flattening another theme for markets, but without the classic growth-vs-value trade emerging. Rate sensitive defensives the only winners, with health care, utilities, consumer staples and real estate higher. Tech, energy and consumer discretionary in the other end, selling off 2-3%. S&P500 closed down -0.9%, Dow -0.9%, Nasdaq -1.4% and Russell 2000 -1.4%. Asian markets are following the move lower this morning, with the Chinese property sector weighing on market sentiment. US futures have however turned slightly positive.

FI: Global bond yields continue to decline and the curves flatten ahead of the string of central bank meetings this week. At the same time, the break-even inflation (BEI) rates have declined as nominal yields have declined more than real yields. The 10Y US BEI rate has declined some 30bp since mid-November. In Europe the 10Y German BEI-rate has also declined since mid-November, but to a smaller extent and here both nominal and real rates have declined.

FX: Yesterday's session was characterised by currencies that do well amid global curve flattening in the likes of USD, JPY and CHF. On the other hand, NOK suffered heavily from both the global environment and markets doubting Norges Bank's signal of a rate hike on Thursday. That returned EUR/NOK back above 10.20. EUR/SEK was little changed and still trades in the mid-10.20s.

Credit: As was the case on Friday, CDS indices outperformed cash bonds yesterday. iTraxx Xover tightened 2.5bp (to 257bp) and Main 0.7bp (to 51.7bp). Both HY and IG bonds closed unchanged.

Nordic macro

In Sweden, we expect November CPIF and CPIF excl. Energy to print 3.3 % yoy and 1.7 % yoy, respectively. That 0.1 p.p. above and 0.2 p.p. below Riksbank's respective forecasts. Normally, core inflation falls slightly on a monthly basis in November, being pulled lower by international flight tickets and charter packages. This year, there is a risk of a slightly bigger drop as especially charter packages showed an unusually large increase in October. These price cuts are partially balanced by higher food and clothing prices. Hence, we expect core inflation to drop a tenth on a monthly basis. The tricky part these days, however, is to gauge the impact from energy prices and in particular electricity prices. Not only was the weather unusually cold in the last week of November, pushing the electricity price at the consumer level 7.0 % higher month on month, car fuel also continued to rise to record highs.

Daily Pivots: (S1) 149.71; (P) 150.24; (R1) 150.60; More...

Intraday bias in GBP/JPY remains neutral as range trading continues. On the downside, firm break of 148.93 key structural support will carry larger bearish implications. Next target is 161.8% projection of 158.19 to 152.35 from 154.70 at 145.25. On the upside, however, break of 152.35 support turned resistance will argue that the pull back from 158.19 is complete. Intraday bias will be turned back to the upside for retesting 158.19 high.

In the bigger picture, the break of medium term channel support, and bearish divergence condition in week MACD are raising the chance of medium term topping at 158.19. Firm break of 148.93 support will argue that GBP/JPY is at least correcting the whole rise from 123.94 (2020 low). In this case, deeper fall would be seen to 38.2% retracement of 123.94 to 158.19 at 145.10. Nevertheless, strong rebound from 148.93 will retain medium term bullishness for another rise through 158.19 at a later stage.

Daily Pivots: (S1) 127.99; (P) 128.22; (R1) 128.44; More....

EUR/JPY is still bounded in range of 127.36/129.09 and intraday bias remains neutral first. On the downside, break of 127.36 will resume larger pattern from 134.11 to 126.58 medium term fibonacci level. We'd look for some support from there to bring rebound. But sustained break of 126.58 will carry larger bearish implications. On the upside, break of 129.09 will bring stronger rebound to 55 day EMA (now at 129.66) and above.

In the bigger picture, as long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of medium term bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.

Daily Pivots: (S1) 0.8512; (P) 0.8531; (R1) 0.8561; More...

Intraday bias in EUR/GBP remains neutral but further rise is expected with 0.8487 minor support intact. On the upside, firm break of 0.8593 resistance will be the first sign of larger bullish reversal and target 0.8656 resistance next. On the downside, however, break of 0.8487 will turn bias back to the downside to retest 0.8379 low instead.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8593 resistance holds, towards long term support at 0.8276. We'd look for bottoming signal around there to bring reversal. Meanwhile, firm break of 0.8593 will now be an early sign of medium term bottoming. Further break of 0.8656 will pave the way to 38.2% retracement of 0.9499 to 0.8379 at 0.8807.

Daily Pivots: (S1) 1.5747; (P) 1.5809; (R1) 1.5881; More...

Intraday bias in EUR/AUD is turned back to the upside with break of 1.5851 minor resistance. Stronger rally would be seen back to retest 1.6168. On the downside, though, break of 1.5716 will revive the case that rebound from 1.5354 has completed, and bring retest of this support.

In the bigger picture, medium term outlook is neutral for the moment. Rise from 1.5354 is seen as the third leg of the corrective pattern from 1.5250 low. Further rise cannot be ruled out, but even in that case, strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

Daily Pivots: (S1) 1.0398; (P) 1.0415; (R1) 1.0428; More....

EUR/CHF is staying in consolidation from 1.0365 and intraday bias remains neutral first. Further decline is expected as long as 1.0511 resistance holds. On the downside, break of 1.0365 will resume larger down trend from 1.1149 to 161.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0200 next.

In the bigger picture, long term down trend from 1.2004 (2018 high) is now extending. Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. On the upside, break of 1.0694 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of rebound.

General trend

• Asian bond yields trade generally lower after decline in UST yields.
• BOJ again acted amid rise in short-term rates.
• AUD declined after NAB business confidence data, omicron cases in NSW rose.
• WTI Crude FUTs have traded modestly lower.
• US equity FUTs trade slightly higher; On Monday, US equity markets and UST yields declined amid focus on Fed meeting [Dec 14-15], UK and omicron was also in the headlines.
• Travel-sensitive firms trade generally lower in Asia.
• Hang Seng has declined by over 1%; Property developers remain in focus [Agile Group drops >9%, Evergrande down >5%, Shimao Group declines by >6%; Fantasia denied press report related to creditor takeover]; Casinos drop amid focus on omicron.
• Shanghai Composite traded slightly lower during the morning session (-0.3%); Property index dropped >1.8%.
• Nikkei 225 has extended decline [Heavyweights decline (Fast Retailing, Softbank Group)]; Japan’s PM commented on stock buybacks.
• S&P ASX 200 has pared losses; Resources and REIT indices rise; Woolworths guidance weighs on Consumer Staples index.
• China PBOC may conduct MLF operation around Dec 15th.
• NZ to publish half-year fiscal update on Dec 15th (Wed).
• US PPI data is due later today.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened -0.2%.
• WOW.AU Guides H1 Australia food EBIT A$1.19-1.22B v A$1.31B y/y; in Q2 Australia food market has moderated.
• AIR.NZ Enters into revised Crown support package which is to include extra NZ$500M liquidity.
• MSB.AU Novartis to terminate agreement before closing; Mesoblast to focus on bringing Remestemcel-L to market.
• (AU) Australia Nov NAB Business Confidence: 12 v 20 prior; Conditions: 12 v 10 prior.
• (NZ) Reserve Bank of New Zealand (RBNZ): Has lent an additional NZ$500M under the Funding for Lending Program (FLP), total loans under the program are now at NZ$6.71B.
• (AU) Australia, New South Wales not planning lockdowns despite rise in COVID cases [omicron cases in NSW rose to 85, NSW Health said further cases of the new strain are expected] - AFR.

Japan

• Nikkei 225 opened -0.3%.
• (JP) Bank of Japan (BOJ) to buy ¥2.0T in bonds via repurchase agreements (2nd consecutive operation, follows rise in Japanese repo rates); Reminder yesterday was the first operation of this kind since 2006.
• (JP) Japan PM Kishida: Need to think carefully about stock repurchase restrictions; Quarterly Financial Results review is a meaningful issue.
• (JP) Bank Of Japan (BOJ) Offers to purchase ¥7.0T in JGB futures.
• 7203.JP Halts additional factories; Maintains 9.0M volume forecasts.
• (JP) Japan Oct Final Industrial Production M/M: 1.8% v 1.1% prelim; Y/Y: -4.1% v -4.7% prelim.

Korea

• Kospi opened -0.6%.
• (KR) South Korea Nov Export Price Index Y/Y: 25.5% v 25.3% prior; Import Price Index Y/Y: 35.5% v 35.8% prior; Import Price M/M: -0.6% v 4.8% prior (1st decline in import prices in 7 months).

China/Hong Kong

• Hang Seng opened -1.1%; Shanghai Composite opened -0.3%.
• (CN) China State Planner (NDRC): Makes promise to increase the effective supply of raw materials to help increase industrial sector development.
• (CN) China PBOC sets Yuan reference rate: 6.3675 v 6.3669 prior.
• 941.HK Receives approval for RMB share issue from CSRC; Guides FY21 Net CNY114.3-116.5B (+6-8% y/y), Op Rev CNY844.9-852.6B (+10-11% y/y).
• (CN) ADB cuts 2021 China forecast to 8.0% from 8.1%, cuts 2022 forecast to 5.3% from 5.5%.
• (CN) Mainland China detects first Omicron variant case in Tianjin - Global Times.
• (HK) Hong Kong Chief Exec Lam: China to hold meetings with Hong Kong on travel plan in Shenzhen.
• Fantasia, 1777.HK Denies media report on creditor takeover.
• (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net CNY0B v Net CNY0B prior.
• (CN) China Beijing Think Tank: China needs to cut rates to ensure growth of at least 5% during 2022.

North America

• TSLA CEO Musk files form 4: exercises options related to ~2.13M shares at $6.24/share; to sell ~934K shares.
• (US) According to Solar Energy Industries Association solar installations in the US will decline 15% in 2022 due to higher prices - press.

Levels as of 00:15ET

• Hang Seng -1.2%; Shanghai Composite -0.4%; Kospi -0.5%; Nikkei225 -0.8%; ASX 200 -0.0%.
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 -0.6%.
• EUR 1.1286-1.1272; JPY 113.67-113.46; AUD 0.7135-0.7090; NZD 0.6765-0.6736.
• Commodity Futures: Gold -0.1% at $1,786/oz; Crude Oil -0.6% at $70.91/brl; Copper -0.4% at $4.27/lb.

Daily Pivots: (S1) 1.1259; (P) 1.1289; (R1) 1.1317; More...

Range trading continues in EUR/USD and intraday bias remains neutral first. Downside breakout is mildly in favor with 1.1382 minor resistance intact. On the downside, break of 1.1185 will resume larger fall from 1.2348. Next target is 161.8% projection of 1.2265 to 1.1663 from 1.1908 at 1.0934. On the upside, however, firm break of 1.1382 resistance should confirm short term bottoming at 1.1186. Intraday bias will be turned back to the upside for 55 day EMA (now at 1.1450).

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Daily Pivots: (S1) 1.3192; (P) 1.3230; (R1) 1.3253; More...

Outlook in GBP/USD remains unchanged and intraday bias stays neutral. Focus stays on 1.3164 medium term fibonacci level. Sustained break there will carry larger bearish implication, and target 161.8% projection of 1.4248 to 1.3570 from 1.3833 at 1.2736. On the upside, though, break of 1.3351 support turned resistance will indicate short term bottoming, and turn bias back to the upside for 1.3512 resistance next.

In the bigger picture, immediate focus is now on 38.2% retracement of 1.1409 to 1.4248 at 1.3164. Sustained break there will argue that whole rise from 1.1409 has completed at 1.4248, after rejection by 1.4376 long term resistance. That will revive some medium term bearishness and and target 61.8% retracement at 1.2493. However, strong rebound from current level will revive that case and up trend from 1.1409 is still in progress, and probably ready to resume.