Daily Trade Recap

Headlines:

• Bank of Canada: Sees signs of broadening recovery
• BoC: Output gap appears to be smaller than projected in Oct
• Saudi Arabia feels oil prices could stabilise around $60
• Fed’s Plosser: Waiting too long to raise rates risks rapid inflation build up
• Plosser: Data suggests Fed needs to raise now or soon
• Fed’s Brainard: Fed exploring targeting margin requirements
• Osborne: OBR forecasts UK 2015 GDP +2.4% vs +2.3% prev
• OBR sees 2014 budget deficit at 5.0% of GDP vs 4.9% prev
• France confirms 2015 public deficit to be cut to 4.1% of GDP
• EU says the Troika and Greece are still discussing budget issues

Data:

• November 2014 US ISM non-manufacturing PMI 59.3 vs 57.5 exp
• November 2014 US ADP employment report 208k vs 221k exp
• November 2014 US Markit services PMI final 56.2 vs 56.5 exp
• Q3 2014 US non-farm productivity final 2.3% vs 2.4% exp
• UK Markit/CIPS services PMI Nov 58.6 vs 56.5 exp
• Eurozone Markit services PMI Nov final 51.1 vs 51.3 exp
• Eurozone retail sales Oct mm +0.4% vs +0.5% exp
• Swiss Q3 GDP qq final +0.6% vs +0.3% exp
• German Markit services PMI final 52.1 vs 52.1 prev
• France Markit services PMI Nov 47.9 vs 48.8 exp
• Italian Markit services PMI Nov 51.8 vs 50.2 exp
• US MBA mortgage market index 347.0 vs 374.5 prior

Comment:

Muted session overnight with equities mildly firmer, USD firmer, Treasuries pretty much unchanged and the commodity space mixed.

Equity markets were mostly positive overnight with the S&P500 trading at 2072.01, up 5.63. Dow30 at 17894, up 26 and the Nasdaq100 the laggard trading at 4309.35, -0.10. Elsewhere the Dax30 closed the day up 33.5 points at 9994.25. The Nikkei225 continues to surge hand in hand with a weakening Yen up 130 at 17900. Locally the Aus200 ends the day higher by 22 at 5347.

Copper traded lower down 1 cent on the day at 2.868 and still inside Mondays Bullish reversal candle. Gold trades firmer on the day despite a stronger USD and trades at 1209.96, up $12.97 eyeing Mondays highs and channel resistance. Silver closes flat on the day at 16.41 after an early challenge of channel resistance at 16.60 proved too hard.

Energy markets go out softer on the day, Brent came under pressure after the Saudi comment with WTI Crude supported after EIA inventories showed a drawdown of 3689K vs exp surplus of 1750K. WTI trades in the after market at 67.33, down 39 cents. WTI remains stuck in between the 50% level of last week' s bearish Marabuzo candle on the weekly chart at 70.39 and the 50% of Mondays bullish reversal Marabuzo candle at 66.65.

Another good day for the USD against most pairs as data points had the markets see sawing early. GBP was the exception with Osborne putting a floor under the beleaguered pound, Cable trades at 1.5684, up 39 on the session. EurGbp lower by 70 points at 0.7847.

The Euro sank in European trading and never recovered as the USD held the bid throughout US trading. Tonight' s ECB meeting will determine what happens next... EurUsd trades on its lows at 1.2308, down another 78 points. EurChf dropped back to 1.2033 and EurJpy trades at 147.45, down 20.

It was all one way trade in UsdJpy with 120 now the next target for the bulls. We trade at 119.78, up another 60 on the day.

The commodity bloc were mixed on the day. The Aussie saw see-saw trade. The GDP miss sent it to its lows at 0.8388, just shy of the 0.8385 (AB=CD and 3 Drives target) before a bounce ensued, but a failure to overcome 0.8443 had us heading back to the 0.8400 handle. We close at 0.8401. The Kiwi closes the day down 42 points at 0.7758. Kiwi H1 also has a 3 Drives pattern with the ideal target at 0.7731. UsdCad closes mildly lower after a BoC chop during the rates announcement. We go out at 1.1368, lower by 33 points. BoC's Poloz is due in 30 minutes so caution is warranted as he tends to talk down the Loonie.

The Day Ahead:

A busy day ahead with BoC's Poloz out in 30 minutes.... Aussie gets Retail Sales and Trade data which could again put the local unit under pressure. The major data points though are the ECB and BoE rate announcements later in the day.