Private Sector PMIs, U.S Employment, and FED Chair Powell in Focus

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Kiwi Dollar, the Japanese Yen, and the Aussie Dollar were in action this morning, with economic data from China also in focus.

For the Japanese Yen

Capital spending increased by 1.2% in the 3^rd quarter, year-on-year. Capital spending had been up by 5.3% in the 2^nd quarter.

In November, Japan’s Manufacturing PMI rose from 53.2 to 54.5, which was up from a prelim 54.2.

According to the November survey,

• The latest increase signaled the strongest improvement in manufacturing sector conditions since Jan-2018.
• Production volumes rose at the fastest pace since April, supported by a pickup in new orders.
• New orders grew at the most marked pace in 7-months.
• Growth was held back, however, by reports of difficulties in sourcing and receiving raw materials.
• Manufacturers increased employment levels for an 8^th consecutive month, driven by capacity pressures. The pace of hiring was the fastest since Apr-2019.
• In November, the pace of input price inflation was the strongest since Aug-2008.
• The rate of factory gate inflation eased, though was the 2^nd highest in over 13-years.

The Japanese Yen moved from ¥ 113.181 to ¥113.254 upon release of the PMI figures. At the time of writing, the Japanese Yen was down by 0.29% to ¥113.500 against the U.S Dollar.

For the Aussie Dollar

Manufacturing sector and 3^rd quarter GDP numbers were in focus this morning.

In November, the AIG Manufacturing Index increased from 50.4 to 54.8.

According to the November Survey,

• This was the first month of improvement following 3 months of flat results.
• All sectors expanded except for chemicals, which was stable.
• Food & beverages bounced back into growth, with the PMI up 19.9 points to 57.3.
• All 7 activity indices expanded or were stable in November. Deliveries rose by 12.2 points to 53.4, with stocks up 7.0 points to 58.6. Strong demand supported an 8.5 point rise to 54.6 for exports.
• The input price index slipped by 3.5 points to 78.3, while the selling index hit a series high 68.1, up by 4.2 points in the month to 68.1.

The Aussie Dollar moved from $0.71242 to $0.71299 upon release of the figures that preceded 3^rd quarter GDP numbers.

In the 3^rd quarter, the economy contracted by 1.9% quarter-on-quarter versus a forecasted 2.7% contraction. Year-on-year, the economy grew by 3.9% versus a forecasted 3.0%. The economy had expanded by 9.6% in the 2^nd quarter year-on-year, and by 0.7% quarter-on-quarter.

According to the ABS,

• Domestic demand drove the demand with prolonged lockdowns leading to a marked decline in household spending.
  • Private demand detracted 2.4 percentage points from GDP, with a 4.8% fall in household final consumption expenditure.
  • Spending on services slid by 5.8%, with falls in hotels, cafes, and restaurants, recreation and culture and transport services.
• The decline was partly offset, however, by growth in net trade and public sector expenditure.
  • Public demand contributed 0.7 percentage points to GDP growth.
• Household savings to income rose from 11.8% to 19.8%, the rise driven by increased household income coupled with reduced spending.

The Aussie Dollar moved from $0.71243 to $0.71321 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.13% to $0.7136.

For the Kiwi Dollar

Building consents fell by 2.0% in October, following on from a 2.0% decline in September.

According to NZ Stats,

• In the month of October, 4,043 new dwellings were consented.
• In the year-ended October 2021, the actual number of new dwellings consented was 47,715, up 26% from the October 2020 year.

The Kiwi Dollar moved from $0.68245 to $0.68217 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.13% to $0.6831.

From China

In November, the Caixin Manufacturing PMI fell from 50.6 to 49.9 versus a forecasted decline to 50.5.

According to the November survey,

• Three of the 5 PMI components weighed in November, these being
  • New orders fell marginally after 2-months of expansion. High output prices and the pandemic were cited as reasons for the decline.
  • Employment levels fell for a 4^th consecutive month, though the rate of job shedding remained marginal.
  • Suppliers’ delivery times also weighed.
• By contrast, output and stocks of purchases had positive influences.
• After rising rapidly in October, input costs rose only modestly in November, with the rate of inflation the slowest since Oct-2020.
• As a result, the rate of output charge inflation also slowed considerably in the month.

The Aussie Dollar moved from $0.71392 to $0.71347 upon release of the figures.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic calendar. German retail sales figures will be in focus going into the European open. Later in the morning, manufacturing sector PMIs for member states and the Eurozone will also provide direction. Barring marked revisions to prelim figures for France and Germany, expect Italy and the Eurozone’s PMIs to be key.

On the monetary policy front, central bank chatter will also need monitoring.

At the time of writing, the EUR was down by 0.15% to $1.1321.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Finalized manufacturing PMI numbers for November will be in focus.

Barring a marked revision from prelim numbers, however, the PMI should have a muted impact on the Pound.

At the time of writing, the Pound was down by 0.02% to $1.3296.

Across the Pond

It’s another relatively busy day ahead. ADP nonfarm employment and ISM Manufacturing PMI numbers will be in focus. Expect both sets of numbers to draw plenty of interest.

On the monetary policy front, FED Chair Powell will also be delivering day 2 of testimony on Capitol Hill. The markets will be looking for any shift in views on inflation following Tuesday’s talk of retiring the word “transitory”.

At the time of writing, the Dollar Spot Index was down by 0.01% to 95.985.

For the Loonie

It’s a quiet day ahead, with with building permit figures for October unlikely to move the dial.

Crude oil inventories and COVID-19 news updates will likely influence, however.

At the time of writing, the Loonie was up by 0.16% to C$1.2758 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.