With the US non-farm payroll report later today, Asia was content to sit on its collective hands in a quiet Friday session.
Risk was given an early fillip after it was reported that China was considering lowering the reserve ratio requirement (RRR) for small and medium-sized financial institutions that meet loan growth requirements in order to promote lending to small businesses. PBOC Vice governor Pan was quoted by the China Securities Journal though no specific details were mentioned. The RRR for small and medium-sized banks is 2 percentage points less than that of their larger peers while rural cooperative banks have a 5.5 percentage point lower ratio and rural credit unions enjoy a 6 percentage point reduction.
AUD was the major beneficiary of the headline, AUDUSD rallying through 1.04 to hit its highest level since end-September. However the pair ran out of steam as wholesale price inflation accelerated at a slower pace in the third quarter. Producer prices rose 0.6 percent in the July to September period from the previous quarter as fuel prices eased, helped by the stubbornly firm AUD.
Improving data gave risk appetite a boost overnight and generally helped risk currencies higher. AUDUSD touched the 1.04 handle while USDJPY edged closer to last Friday’s 4-month highs above 80.0. The EUR was also responding well to the better risk appetite but fell back late in the session after Greece’s Supreme Court commented that the planned austerity/pension-related reforms may be unconstitutional. It later transpired that this was merely an opinion and not a binding step.
Data-wise, the private ADP employment change was better than expected at +158k versus 131k and weekly jobless claims fell 9k on the week to 363k. Consumer confidence in October was the highest since February 2008, coming in at 72.2 from 68.4. The US ISM manufacturing reading also beat forecasts with a 51.7 print though prices paid were lower at 55.0 from 58.0. The series of better data helped Wall Street to rally with the DJIA rallying 1.04 percent, S&P +1.09 percent and the Nasdaq +1.44 percent.
Have a great weekend.
Data Highlights
US Oct. Challenger Job Cuts out at +11.6% y/y vs. -70.8% prior
US Nov. RBC Consumer Outlook out at 48.9 vs. 48.4 prior
US Oct. ADP Employment Change out at +158k vs. 131k expected and revised 114k prior
US Q3 Non-farm Productivity out at 1.9% vs. 1.8% expected and revised 1.9% prior
US Q3 Unit Labour Costs out at -0.1% vs. +0.8% expected and revised +1.7% prior
US Initial Jobless Claims out at 363k vs. 370k expected and revised 372k prior
US Continuing Claims out at 3263k vs. 3250k expected and revised 3259k prior
US Oct. Markit PMI Final out at 51.0 vs. 51.3 expected and 51.3 prior
US Bbg. Consumer Comfort Index out at -34.7 vs. -34.6 prior
US Oct. Consumer Confidence out at 72.2 vs. 73.0 expected and revised 68.4 prior
US Oct. ISM Manufacturing out at 51.7 vs. 51.0 expected and 51.5 prior
US Oct ISM Prices Paid out at 55.0 vs. 56.5 expected and 58.0 prior
US Sep. Construction Spending out at +0.6% m/m vs. 0.7% expected and revised -0.1% prior
US Oct. Total Vehicle Sales out at 14.22 mln vs. 14.9 mln expected and 14.88 mln prior
JP Oct. Monetary Base out at +10.8% y/y vs. 9.0% prior
NZ Oct. ANZ Commodity Prices out at +1.3% m/m vs. revised 3.4% prior
AU Q3 PPI out at +0.6% q/q, +1.1% y/y vs. 1.0%/1.6% expected and 0.5%/1.1% prior resp.
Upcoming Economic Calendar Highlights (All Times GMT)
GE PMI Manufacturing (0855)
Norway Unemployment Rate (0900)
EU PMI Manufacturing (0900)
UK PMI Construction (0930)
CA Unemployment Rate (1230)
CA Net Change in Employment (1230)
US Change in Non-farm Payrolls (1230)
US Unemployment Rate (1230)
US Factory Orders (1400)]
US Fed’s Williams to speak (1825)
Andrew Robinson,
SAXO BANK