China Beige Book survey:
- Economy stabilized in Q4
- China sales, profits, employment all stronger in 2h
- Strong stimulus could see ‘out-of-control’ share gains
- China deflation concerns now justified
- China credit access stunted, just 19% of firms borrowed
Its called Beige Book because Red Book was already taken*
*Note – this is untrue
The China Beige Book is a privately conducted survey adapted from methodology used by the U.S. Federal Reserve’s “Beige Book”. It sources a lot of its own data which includes “survey data from over 2,000 Chinese firms each quarter, in-depth interviews across each of its regions and sectors, and a separate banker survey”.
New Zealand finance minister English:
- NZ growth potential may be higher than thought
Headlines on Bloomberg
This in the wake of the strong GDP result earlier: New Zealand Q3 GDP: +1.0% q/q (vs. expected is +0.7%)
More from English:
- NZ has solid economic growth
- More employment
- Higher wages
- Few pressures on inflation
“This suggests New Zealand’s economic growth potential before inflation sets in, essentially the speed limit of the economy, is higher than expected previously”
Maybe its just me … but now the FOMC is out of the way the markets already feel like they’re quietening down for the holiday break.
OK, you’re right … it is totally just me and my wishful thinking
Still, look at this economic calendar for Asia today … yawn-a-rama:
International Transactions in Securities data from Japan’s Ministry of Finance is due at 2350GMT:
- Japan Buying Foreign Bonds
- Japan Buying Foreign Stocks
- Foreign Buying Japan Bonds
- Foreign Buying Japan Stocks
From Australia, at 0030GMT – RBA FX transactions for November. Watch these numbers to see if the RBA intervened in the currency in November (spoiler …. they didn’t).
- Japan Cabinet approval rate at 43%
Headlines on Bloomberg
- The next election is in 4 years, so go tell someone who cares
(He didn’t really say this, K? But I bet its what he’s thinking)
Wow, what an overnight session.
Adam has a summary of it here: ForexLive Americas wrap: US dollar soars after FOMC
If that’s TL/DR …. here’s my summary:
- patience = considerable time
- couple = 2
- “at least’ = disregard couple
OK, moving on …
Any trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:
Here are the data results for New Zealand Q3 GDP: +1.0% q/q
- expected +0.7%
- prior was +0.7%
New Zealand Q3 GDP: +3.2% y/y
- expected +3.3%
- prior was +3.2%, revised down from +3.9%
Growth was largely driven by primary industries, which are up 5.8%
- Agriculture (up 4.7 percent)
- Mining (up 8.0 percent)
- Forestry and logging was down 4.0 percent
Manufacturing activity also grew (2.0 percent)
- Metal product manufacturing (up 4.9 percent)
- Machinery and equipment manufacturing (up 3.7 percent)
Household spending was up 1.5 percent
- 4.0 percent increase in durables – including used motor vehicles and furniture (this is the highest quarterly increase in durables since before the global financial crisis)
Investment also increased (3.5 percent), mainly due to increased spending on machinery and transport equipment
The NZD spiked on the release, but its all about the USD in the wake of the FOMC & Yellen’s commentary and thus the spike was short lived. The revision in the prior y/y didn’t help, either.NZD back now around where it was 0.7705
Forex news for December 17, 2014:
- FOMC removes ‘considerable time’ from guidance, replaced with ‘patience’
- FOMC says ‘patience’ is consistent with ‘considerable time’
- Full text of the FOMC decision
- Fed doesn’t believe it will begin the normalization process [hike rates] for ‘at least the next couple of meetings’
- Market-based measures of inflation expectations likely to be transitory
- All FOMC members expect lift off in 2015
- FOMC is not considering an overshoot of its 2% inflation target
- FOMC forecasts: Fed leaves 2015 GDP unchanged, sees inflation lower
- Russian ruble gains nearly 10%, USD/RUB at 61.81
- S&P 500 up 40 points, or 2%, to 2012
- US 10-year yields up 7 bps to 2.13%
- Gold down $9 to $1187
- WTI crude flat at $55.88
- USD leads majors, JPY lags
The short version of the FOMC statement: We removed ‘considerable time’ but ‘patience’ means the exact same thing as ‘considerable time’.
There were three moves after the Fed statement:
- Buy the US dollar because ‘considerable time’ was gone
- Sell the US dollar because the statement was re-worded in a way that ‘considerable time’ was basically still there
- A massive wave of real money US dollar buying
The final point is debatable. You could argue the Fed was more hawkish, especially the line about all Fed members seeing liftoff in 2015 but the rates market (Fed funds) shifted more dovishly so I don’t buy it. I think there was a lot of money on the sidelines waiting for the Fed to get out of the way to pile into US dollars and that’s what I think we saw.
At the end of the day, the final move was all that mattered and USD/JPY surged 215 pips ton the day to 118.57. Much of it came before the decision as Russia and emerging markets improved. The Cuba news was positive but was only a small factor.
The euro broke down on Coeure’s comments in the strongest hint of sovereign QE yet as he said it was the ECB baseline. Overall, EUR/USD fell as low as 1.2321 and hardly bounced.
An epic short squeeze hit oil prices with Brent up 5% at one point but all the gains evaporated and Brent finishes up just 69 cents and WTI was flat.
While the focus has been on the FOMC and response, a heads-up for NZD traders – the New Zealand Q3 GDP is out at 2145GMT:
- expected is +0.7% q/q
- prior was +0.7%
Also, for the y/y
- expected is +3.3% y/y
- prior was +3.9%
What we have seen this quarter:
- A rebound in milk production after the fall in Q2
- A strong quarter for non-food manufacturin
- Continued strong growth in construction and household spending
Note, there will be annual revisions incorporated in this release, which might well alter the understanding we currently have of the economy & how fast it is growing
Deutsche Bank (mining analyst Paul Young) says that the crash in oil prices is expected to force BHP Billiton to cut about $US2 billion from its capital spend in its onshore US petroleum business over the next four years
Australian Financial Review with the headline (gated)
- Expected to delay any increase in drilling rig numbers at its Permian Basin venture in Texas (until West Texas Intermediate crude recovers to $US80) and to defer infrastructure investment
- BHP’s strategy of focusing its US onshore petroleum activities on oil and gas liquids has come under pressure from the fall in the price of benchmark crude oil prices to below $US65 a barrel
Deutsche expects the oil price to recover to $80 a barrel only in the 2018 financial year
The USDJPY moves up to test the 200 hour MA but not racing with the stocks.
The USDJPY is up testing the 200 hour MA as Dow hits +300 and Nasdaq up +100
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