Forex - European Highlights - Tuesday 3 December 2019


 11:17 (GMT) 03 Dec

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European Highlights - Tuesday 3 December 2019 (0101-PWDL-C01)

European Highlights

European Highlights - Tuesday 3 December 2019 (0101-PWDL-C01)

3 December 2019

Asia FX and News:

+ U.S. Proposes $2.4bn in Tariffs on France over Digital Tax

+ Japan Government Planning Stimulus Package worth 25t Yen ~ NHK

+ Markets shrugged off news on US proposed tariffs on France over digital tax. China retaliated the HK bill legislation via non-trade route mildly supportive for risk sentiment. USD/JPY recovers above 109. Yen weakness more notable against riskier currencies. Japan fiscal stimulus was reported to be worth 25t yen, which PM Abe looks to finalise by this week probably also weighing on the yen. AUD/USD reached the highest in 3 weeks on RBA. RBA rate left unchanged at 0.75% as widely expected. The statement noted transmission lags of monetary policy, which poured cold water on dovish expectations.

Nikkei and JGBs:

+ Nikkei -0.64%, JGB 10yr yield at -0.021%

Europe FX and news

+ The main news of the morning was the comment from President Trump in a press conference at the NATO Summit, saying that he had no deadline on a trade deal with China and it might be better to wait until after the November 2020 election. This triggered a risk off reaction in markets which had been hoping for a phase one deal by the end of the year or at least early in 2020.

+ USD/JPY lost around 15 pips on the statement, falling to a low of 108.83. EUR/USD also fell around 20 pips down to 1.1065 before making a modest recovery.

+ GBP was a little firmer against the EUR on the morning, benefitting from a new Kantar poll showing an increase in the Conservative poll lead to 12% over Labour. The UK construction PMI stayed very weak, but was slightly above market expectations.

+ EUR/CHF dropped 50 pips, slipping below 1.0950 after opening near 1.10, and USD/CHF hit its lowest level since November 18 below 0.99.

+ AUD/USD fell back to opening levels at 0.6840 after extending overnight gains to 0.6860 in early trading.

Bonds and equities

+ Modest early follow through lower for bunds at the open, following a weak o/n session for JGBs (3yr low demand at auction) and AUD bonds (RBA), before checked and minor bounce. BTPs and Greece do stay weak though. Trump verbals then enliven the morning, pulling yields lower after saying that no deadline for trade deal, in many ways after election better. US10s -4bp and bunds -2/3bp.

Data

AU: Net Exports of GDP (Q3) 0.2% (Mkt: 0.2 Prev: 0.6)

AU: RBA - Overnight Rate 0.75% 4cast: 0.75% (Mkt: 0.75 Prev: 0.75)

07:30 GMT - CH: HICP (Nov) % m/m (Mkt: -0.2 Prev: -0.2)

07:30 GMT - CH: CPI (Nov) % m/m (Mkt: -0.1 Prev: -0.2)

07:30 GMT - CH: HICP (Nov) % y/y (Mkt: -0.1 Prev: -0.3)

07:30 GMT - CH: CPI (Nov) % y/y (Mkt: -0.1 Prev: -0.3)

07:45 GMT - FR: Budget Balance YTD (Oct) EUR bn (Prev: -109)

10:00 GMT - EU: PPI (Oct) % m/m (Prev: 0.1)

10:00 GMT - EU: PPI (Oct) % y/y (Prev: -1.2)

Still to be released:

21:30 GMT - AU: AIG Services PMI (Oct) (Prev: 51.5)

Events

17:30 GMT - EU: ECB's Coeure speaks in Brussels

19:10 GMT - NZ: RBNZ's Orr at Parliament Select Committee on FSR


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