Daily Trade Recap - 25^th November, 2014

Headlines:

• US GDP revisions upbeat overall but some analysts are still not convinced
• Three regional banks voted to hike discount rate in Oct – minutes
• OPEC edging toward compromise that would involve following quotas – WSJ
• Russia, Mexico, Venezuela and Saudi Arabia will ‘monitor oil prices for a year’

• RBA’s Lowe says lower AUD is helpful and sees a further drop over time
• Lowe says the RBA can still lower interest rates if they need to
• Carney sees substantial uncertainty about the estimate for slack in the economy
• Carney says MPC has considerable flexibility to provide extra stimulus if necessary
• Carney says he expects UK recovery to continue but remains an economy that requires stimulus

Data:

• Q3 2014 US GDP 2nd reading 3.9% vs 3.3% exp q/q
• November 2014 US Richmond Fed manufacturing index 4 vs 16 exp
• US Nov consumer confidence 88.7 vs 96.0 expected
• September 2014 Canadian retail sales 0.8% vs 0.5% exp m/m
• German Q3 GDP final qq SA +0.1% vs +0.1% exp/prev
• October UK mortgage lending hits the lowest since January 2014
• Spanish PPI Oct mm -0.5% vs +0.5% prev

Recap:

Aussie whacked by Lowe's comments; USD pressured lower after failing to rally on stronger than expected US GDP, then sold again after a miss on consumer confidence and Richmond Fed data coupled with decent demand for 5-10 year paper which pushed US rates lower; Oil sinks again as both OPEC and Non-Opec members fail to come up with anything constructive.

Mixed day for equity markets with the Nikkei lower on the day, down 90 at 17400. Aus200 managed to climb 32 and sits at 5355. The Dax30 closes in the black after German GDP comes in as expected at +0.1% at 9865.00 up 51.75 points.

US markets trade mixed in late US trade after Consumer Confidence and Richmond Fed data took the wind out of the early rally. The S&P500 trades down 2 tics at 2067.38, Dow30 at 17809, up 16 and the Nasdaq100 up 8.50 points at 4292.25.

The precious metals took advantage of a weaker USD with both making modest gains on the session. Gold closes at 1200.86 up $3.76 and Silver higher by 17 cents at 16.67.

WTI Crude heads back to 4 year lows as the main oil producers – Russia, Venezuela, Mexico and Saudi Arabia failed to reach any agreement on the current over supply of oil to the market. The latest breakdown in talks has the market anticipating that OPEC will not cut production from the current 30 million Barrels per day output. We close the day on the lows at 73.83, down $1.81. Late news that the CME has just hiked oil margins by 4% and a tweet from a senior Saudi energy jorno wont help things either..

The Aussie was the mover in the Fx arena with the currency sliding across the board after the RBA deputy governor Lowe's comments during the Asian session. We enter Sydney trade at 0.8528, down 75 against the USD. AudJpy at 100.59, -126. EurAud at 1.4618, +165 and back to last weeks high pre the Draghi put. GbpAud is back above 1.84 at 1.8406, +158.

Apart from the Aussie the USD closes the day lower across the board after it again failed to rally on better headline data continuing the theme of late of selling good US news... The EurUsd is back at 1.2473 higher on the day by 40 points. Euro crosses also close in positive territory with EurChf at 1.2026 and EurGbp at 0.7941, +21. EurJpy goes out down 14 at 147.14 but off its worst levels after a quick trip to 146.29 and back.

Cable closes mildly higher at 1.5705, up 7 points with the GBP caught in between USD and EurGbp flows.

UsdJpy closes lower on the session down 48 points at 117.96 in line with USD weakness and a bid tone in US 5 and 10 year notes.

The Loonie was the star of the little dollars completely ignoring the slide in oil instead strengthening on the stronger Canadian retail sales number pushing the UsdCad lower closing at 1.1257, down 32 points after early run at 1.1313 resistance. Kiwi closes the session lower in sympathy with its Aussie cousin at 0.7806, down 51 on the day.

The Day Ahead:

Today sees UK GDP out of Europe with a raft of US data later in the session. US Durable Goods, Personal Income and Spending, Chicago PMI, Uni of Mich Consumer Sentiment and US home sales data all on tap ahead of Thanksgiving on Thursday.

Technical Perspective:

Whilst not technical in nature....The theme of selling the USD on strong data continued overnight into the Thursday US Thanksgiving holiday and end of month. From a macro perspective though its hard to see any major weakness in the USD heading into the end of year when looking at the current state of play in the bond and equity markets.

With US 10's still yielding 2.26% against the German 10s – 0.748%, French 10s – 1.07%, Spain 10s - 1.92% and UK 10s - 2.01%, combined with a runaway US stock market its hard to see demand for US assets and therefore the USD ending any time soon.