Overnight we have had a glut of Japanese data released, and most of it has been impressive. In particular, industrial production in October surged by 2.4% MoM, 0.4% YoY, compared to expectations looking for 1.1% MoM, -1.0% YoY. In spite of the encouraging turn of momentum in Japan, the overall tone of investor sentiment remains negative – caused predominantly by yesterday’s spate of bank downgrades from ratings agency S&P. The move to cut credit ratings hit a wide range of banks including Goldman Sachs, Citigroup, HSBC, Barclays, BoA and Morgan Stanley, and was the result of a revision to the bank capital criteria. This has understandably put a dent in overall risk appetite, and halted the recent equity market recovery in its tracks. During the Asian session, the Nikkei has lost around half a percent on the day, while the Hang Seng is trading -1.8% and Shanghai Composite -3.3%.
The timing of these downgrades is particularly damaging considering fragile state of confidence and already strained funding environment, but there were some positive developments to come out of yesterday’s session. Eurozone finance ministers finally gave the green light to release Greece’s sixth instalment of bailout cash yesterday, news that should defer speculation of a Greek default or exit for at least another couple of months. That being said, the chatter about a possible bailout of Italy is still rife, with the latest rumours suggesting talks on the matter will begin as soon as December.
Coming up in today’s session there is a noticeable uptick in economic data releases; the morning session kicks off with German unemployment and Norway retail sales, but the real focus will be on the data out of the Eurozone – namely the November CPI estimate and October unemployment rate. In the afternoon we can look forward to Canadian Q3 GDP as well as the US ADP employment report, the latter of which will take on a heightened significance ahead of Friday’s non-farm payroll release.
By
M.Zohaib Gadit
Forex Trading Consultant/Analyst
The timing of these downgrades is particularly damaging considering fragile state of confidence and already strained funding environment, but there were some positive developments to come out of yesterday’s session. Eurozone finance ministers finally gave the green light to release Greece’s sixth instalment of bailout cash yesterday, news that should defer speculation of a Greek default or exit for at least another couple of months. That being said, the chatter about a possible bailout of Italy is still rife, with the latest rumours suggesting talks on the matter will begin as soon as December.
Coming up in today’s session there is a noticeable uptick in economic data releases; the morning session kicks off with German unemployment and Norway retail sales, but the real focus will be on the data out of the Eurozone – namely the November CPI estimate and October unemployment rate. In the afternoon we can look forward to Canadian Q3 GDP as well as the US ADP employment report, the latter of which will take on a heightened significance ahead of Friday’s non-farm payroll release.
By
M.Zohaib Gadit
Forex Trading Consultant/Analyst
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