A look at the day ahead in European and global markets from Gregor Stuart Hunter
The greenback is getting a reprieve as monetary authorities in Asia’s biggest economies signal discomfort with weakness in the U.S. currency, which hit a five-week low this week.
The U.S. dollar index has snapped a nine-day losing streak, last rising 0.1%, and precious metals have retreated, with silver cooling off from a record high of $58.98 hit on Wednesday.
The Chinese yuan pulled back from the strongest levels against the dollar in more than a year after the central bank set a weaker-than-expected official midpoint for the sixth consecutive session, indicating caution over the renminbi’s rapid appreciation.
Meanwhile, yields on 30-year Japanese government bonds pulled back from record highs after Japan’s chief cabinet secretary said the government is closely watching market moves.
Longer-dated bond yields had hit fresh peaks ahead of an expected rate hike from the Bank of Japan later this month.
The jawboning came as BOJ Governor Kazuo Ueda tempered expectations over how far the central bank would raise interest rates, saying there was uncertainty over the path ahead due to the difficulty estimating the country’s neutral rate.
An auction of 30-year JGBs drew the highest demand in more than six years as record yields lured buyers, adding to the sense of relief in Tokyo over investor appetite to hold government debt.
The Indian rupee also weakened to a record against the greenback, breaking past the 90 to the dollar mark and adding pressure to the Reserve Bank of India when it meets on Friday and is expected to cut interest rates.
Equity markets have had a tepid session, with stocks off 0.1% outside of Japan, where the Nikkei 225 is surging 1.8%, led by a blowout 12.4% gain for Fanuc Corp. The industrial robot maker’s shares have surged since they announced a collaboration with Nvidia earlier this week.
In early European trades, pan-region futures were up 0.6%, German DAX futures rose 0.5% and FTSE futures were up 0.3%.
Key developments that could influence markets on Thursday:
Economic data:
Euro Zone: HCOB Construction PMI for November, Retail Sales for October
Germany: HCOB Construction PMI for November
France: HCOB Construction PMI for November
Italy: HCOB Construction PMI for November
U.K.: S&P Global Construction PMI for November
Debt auctions:
France: 9-year, 15-year and 30-year government debt
U.K.: 14-year government debt
(Reporting by Gregor Stuart Hunter; Editing by Sam Holmes)
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