Market Brief Cautious trading ahead Fed and UK election

FX Brief:

• Japan’s annualised GDP was upwardly revised to 1.8% YoY from 0.7%. Quarterly was also revised higher to 0.4% from 0.2% prior.
• Over the weekend China released trade data which showed imports rose for the first time since April, although exports missed expectations to rise a mere 1.3% compared with 3.1% forecast.
• All foreign computer equipment and software is to be removed from China’s government offices and public institutions.
• Australian private house approvals declined by -7% YoY versus +2.8% prior, making it the fastest rate of contraction since May 2018.
• Moody’s highlights the trade war as a key risk in 2020 having lowered its outlook for APAC banks as negative.
• ANZ raise their price target for NZD to 0.63 by the end of 2020, up from 0.61.

Price Action:

• DXY: Bullish engulfing candle on Friday following a firm NFP print suggests a swing low in in at 97.63. However, as we typically find December to be bearish for the US dollar, we’d continue to seek evidence of a top beneath the 98.45-98.64 region.  
• EUR/USD: Back below 1.1000 and it appears the top is in at 1.1116, so bears could look to fade into minor rallies below this key levels over the near-term.
• GBP/USD trades within a tight range above 1.3100 and just below 1.3177. The trend suggests this will move higher, but keep in mind Wednesday’s FOMC meeting and the UK election over Thursday night. We could also see some movement from the polls if a hung parliament looks likely (GBP bearish) or for conservative to extend their lead (GBP bullish).
• AUD/USD continues to coil within the 0.6813-21 range, as it awaits its catalyst (with the most likely contender being Wednesday’s FOMC meeting).

Equities Brief:

• Key Asian stock markets are trading in a cautious tone at the start of the week with key risk events looming ahead; the Fed FOMC meeting outcome out on Wed, 11 Dec and the U.K General Election on Thurs, 12 Dec.
• Also, contrasting economic data is also not helping either the bulls or bears to take a firm control; U.S. jobs data/NFP for Nov has exceeded expectations (266K versus consensus forecast of 180K). On the other hand, China’s exports growth for Nov has declined unexpectedly to -1.1% versus consensus forecast of 1% y/y while exports to U.S. dropped to -23% y/y, the 12th consecutive monthly decline. These dismal trade data from China has indicated the negative effects on China’s growth from the 18-month long U.S-China trade war.
• The Hong Kong’s Hang Seng Index  (HSI) has wiped out almost all its earlier gains recorded in today’s morning session after market participants seem to be hesitant to add on to risk taking positions after yesterday’s mass anti-government demonstration saw almost 800,000 people took part in the streets, stoking fears that the 6-month long of social unrest is not showing any signs of abating.
• The S&P 500 E-Min futures is trading with a slight loss of -0.17% in today’s Asian session to print a current intraday low of 3139 after a strong performance of close to 1.00% seen on last Fri, 06 Dec.

Matt Simpson and Kelvin Wong both contributed to this article

View our guide on how to interpret the FX Dashboard

FX Brief:

• Japan’s annualised GDP was upwardly revised to 1.8% YoY from 0.7%. Quarterly was also revised higher to 0.4% from 0.2% prior.
• Over the weekend China released trade data which showed imports rose for the first time since April, although exports missed expectations to rise a mere 1.3% compared with 3.1% forecast.
• All foreign computer equipment and software is to be removed from China’s government offices and public institutions.
• Australian private house approvals declined by -7% YoY versus +2.8% prior, making it the fastest rate of contraction since May 2018.
• Moody’s highlights the trade war as a key risk in 2020 having lowered its outlook for APAC banks as negative.
• ANZ raise their price target for NZD to 0.63 by the end of 2020, up from 0.61.

Price Action:

• DXY: Bullish engulfing candle on Friday following a firm NFP print suggests a swing low in in at 97.63. However, as we typically find December to be bearish for the US dollar, we’d continue to seek evidence of a top beneath the 98.45-98.64 region.  
• EUR/USD: Back below 1.1000 and it appears the top is in at 1.1116, so bears could look to fade into minor rallies below this key levels over the near-term.
• GBP/USD trades within a tight range above 1.3100 and just below 1.3177. The trend suggests this will move higher, but keep in mind Wednesday’s FOMC meeting and the UK election over Thursday night. We could also see some movement from the polls if a hung parliament looks likely (GBP bearish) or for conservative to extend their lead (GBP bullish).
• AUD/USD continues to coil within the 0.6813-21 range, as it awaits its catalyst (with the most likely contender being Wednesday’s FOMC meeting).

Equities Brief:

• Key Asian stock markets are trading in a cautious tone at the start of the week with key risk events looming ahead; the Fed FOMC meeting outcome out on Wed, 11 Dec and the U.K General Election on Thurs, 12 Dec.
• Also, contrasting economic data is also not helping either the bulls or bears to take a firm control; U.S. jobs data/NFP for Nov has exceeded expectations (266K versus consensus forecast of 180K). On the other hand, China’s exports growth for Nov has declined unexpectedly to -1.1% versus consensus forecast of 1% y/y while exports to U.S. dropped to -23% y/y, the 12th consecutive monthly decline. These dismal trade data from China has indicated the negative effects on China’s growth from the 18-month long U.S-China trade war.
• The Hong Kong’s Hang Seng Index  (HSI) has wiped out almost all its earlier gains recorded in today’s morning session after market participants seem to be hesitant to add on to risk taking positions after yesterday’s mass anti-government demonstration saw almost 800,000 people took part in the streets, stoking fears that the 6-month long of social unrest is not showing any signs of abating.
• The S&P 500 E-Min futures is trading with a slight loss of -0.17% in today’s Asian session to print a current intraday low of 3139 after a strong performance of close to 1.00% seen on last Fri, 06 Dec.

Matt Simpson and Kelvin Wong both contributed to this article