Analysts will tell you that Japan is a current account surplus currency. However, with global tight yield spreads, the economy finds it difficult to recycle surpluses efficiently. How are they relieving the pressure? Corporate Japan is directly investing abroad, an important alternate channel for recycling the countryÃ¢â‚¬â„¢s surplus. If you add the BoJ to this equation, using tactical direct currency intervention, then the upside for the currency should be limited. Everyone and their mother seems to be short yen outright and for risk reasons has had a horrid time depreciating the yen. Thus far, itÃ¢â‚¬â„¢s been a long slow grind. There is growth data out this week.
Below are some of the highlights of the week:
- JPY: Finance Minister admits that they were targeting USD/JPY 80 by intervention.
- AUD: ANZ job advertisements declined -0.7%, m/m, in October, following a -2.2% fall last month.
- IDR: Indonesian GDP growth remained robust in Q3 at +6.54%, y/y. With inflation slowing and Bank of Indonesia easing, the constructive macro environment is likely to support capital inflows.
- TWD: Inflation moderated to +1.22%, y/y in October from +1.37% in September and below the consensus forecast for +1.34%.However, export growth remains strong, rising +11.7% yoy vs. +5.0% expected.
- AUD: NAB business confidence index recovered printing +2 in October from -1 in September, but still far below the 6.2 average in H1. The employment sub indices fell to -1.2 in October from 2.9 in September,
- Hong Kong Chief Executive Donald Tsang said that the HKD peg to the USD will stay at least until the CNY becomes fully convertible.
- CNY: Chinese data is finding it difficult to support riskier currencies. CPI inflation fell to +5.5%, y/y in October. Retail sales growth of +17.2%, y/y in October was weaker than expected last month, (+17.6%). Industrial production grew +13.2%yoy, also weaker than expected (+13.4%) and slower than September’s +13.8%.
- AUD: Westpac consumer confidence rose +6.3%, m/m to 103.4 in November, likely due to last week’s surprise RBA rate cut.
- IND: The official release is not until December 1st, but India’s trade deficit widened to -$19b in October due to a collapse in export growth to +10.8%, y/y, from +36.4%.
- AUD employment rose +10.1k in October, in line with the consensus forecast. The details were constructive with the rise in employment driven by a +20k increase in full-time jobs while part-time employment fell -9.9k. The unemployment rate was unchanged at +5.2%, below the consensus forecast for a rise to +5.3% while the participation rate was unchanged at 65.6%.
- CNY: Export growth moderated to +15.9%, y/y, in October while import growth rose to +28.7%.
- NZD: The Kiwi Business PMI fell 5pts to +46.5 in October while ANZ consumer confidence fell -3.2pts to 112.2 in November.
- INR: India’s central bank intervened today, catching the market long
- KWD: BoK kept its policy rate unchanged at +3.25%, widely expected. Governor Kim maintained a hawkish bias, describing monetary policy as accommodative with core inflation forecast to rise on trend.
- JPY: Japanese loans contracted +0.7%, y/y in September, the smallest fall in two years.