Forex news for Asia trading Monday 5 December 2016

David Cameron: "Holding the Brexit referendum was the stupidest thing any PM could ever do"

Matteo Renzi: "Hold my beer"

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Yep. The Italian constitutional referendum saw a resounding 'No' vote - no to proposed reforms. Upon polling officially closing at 2200GMT exit polls immediately reported a big margin for the 'No' side, a result that was reinforced as actual voting results trickled in.

Prime Minister Matteo Renzi announced his resignation soon after the polls showed his preferred 'Yes' to reform side had been easily defeated.

Meanwhile, the EUR was sold and yen bought (at least initially) - EUR/USD down to just under 1.0510, EUR/JPY to under 118.90. USD/JPY dropped as low as circa 112.90 before coming back strongly to fully recover its drop and add some for the session.

EUR bottomed upon Renzi's resignation announcement and has since stabilised its recovery, though it is still lower for the session compared with Friday's closing levels.

As it happened (read from the bottom up):

  • (In summary) EUR/USD update - Italian referendum, 'No' wins - PM Renzi to resign
  • Italian PM Renzi will resign after the loss
  • EUR extended its fall - bounce now - thin liquidity volatility still
  • Italian referendum - "No' wins. Now expecting a speech from PM Renzi.
  • Reuters: 1st projection of Italy referendum ... actual count points to clear Renzi defeat
  • Italian referendum - multiple calls now for PM Renzi to resign
  • Italian exit polls show PM Renzi losing referendum "by clear margin"

In other European politics/election news,

  • Austria's far-right presidential candidate was defeated on Sunday

Elsewhere we had Trump tweeting out an attack on China, its yuan policy & South China Sea military bases, coming after his weekend call with Taiwan:

  • Trump on Twitter attacking China (yuan devaluation)
  • "Meanwhile, Trump has been tweeting about the yuan... "
  • Trump calls Taiwan which leads China to express more than just concern

The PBOC responded with a 'not bothered', another devaluation of the yuan again today:

  • People's Bank of China sets yuan reference rate at 6.8870 (vs. Friday at 6.8794)

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There was plenty of data today, most notable more Q3 GDP 'partials' from Australia. These were a mixed bag, boosts to inventory and modest wage rises a positive for the data (due December 7 at 0030GMT) but company profits a weight.

Also today, New Zealand PM John Key announced he would be resigning and not contesting the 2017 election. Deputy PM and finance minister Bill English is tipped as the frontrunner for the PM's job.

Currencies were active - EUR I've covered. CHF and GBP followed similar pattern to the EUR, USD/CHF higher (weaker CHF against the dollar) without too much of a retrace, though. Cable dropped early and has since recovered a lot, but not all of its losses.

Early flows (in the very thin -preTokyo Monday morning trade) were into the yen, USD/JPY and EUR/JPY down sharply. USD/JPY dropped under 113 but recovered almost as quickly after choppy trading around and just above 113. It then made a fresh session high (above Friday closing levels), topping out circa 113.85. EUR and JPY moves combined to have EUR/JPY dropping under 119 before it, too chopped around and then added 150+ points before topping ahead of 120.50.

AUD and NZD are both lower. The NZD is the bigger loser on the session of the two for a lot of the session.

Gold had an early move higher but is more or less unchanged on the session as I update. Oil is lower.

Other headlines:

Monday:

  • Moody's says there are no NZ ratings implications from PM Key's resignation
  • USD, GBP, CHF, CAD, AUD, NZD: Weekly Outlook - Morgan Stanley
  • OIL - India's cash clampdown will slow economy, lower oil demand
  • Losing AAA rating may be just what Australia needs
  • China - November Caixin Services PMI: 53.1 (prior 52.4) & Composite 52.9 (52.9)
  • What's next for gold after the Italian referendum?
  • New Zealand Treasury 'Monthly Economic Indicators'
  • Japan MOF's Asakawa: Fully support BOJ's new framework
  • Australia - ANZ Job Ads November: +1.7% m/m (prior +1.0%)
  • Japan - November Nikkei Services PMI 51.8 (prior 50.5) & Composite 52.0( 51.3)
  • Australia - Q3 Inventories +0.8% q/q (expected +0.3%) & profits +1.0% q/q (expected +3.0%)
  • UK - BRC Shop Price Index for November: -1.7% y/y (prior -1.7%)
  • New Zealand - ANZ Commodity Price Index (November): +2.7% m/m (prior +0.7%)
  • Australia - Melbourne Institute Inflation gauge( Nov.): 0.1% m/m (prior 0.2%)
  • NZ PM Key will not stand for re-election in 2017
  • Services PMI from Australia for November: 51.1 (prior 50.5)
  • Trade ideas thread - Monday 5 December 2016
  • Boris Johnson: UK should not pay 'large sums' for EU trade access
  • Monday morning Forex prices, early indications: 5 December 2016

Weekend:

  • Germany's Schaeuble: If Greece wants to stay in the euro, Athens must implement reforms
  • Weekend oil - OPEC & non-OPEC countries to meet on December 10 in Vienna
  • "Norway government wins backing for 2017 budget, prevents collapse"
  • Fed's Dudley weekend speech - no comments on economy nor monetary policy
  • How to be a More Consistent Trader