Asia equity markets are trading lower today with the Nikkei (-0.27%), Shanghai Composite (-0.20%), KOSPI (-0.18%), and the Hang Seng (-0.65%) all losing ground. In the US, S&P 500 Futures are down -0.04. Predictably investor appetite appears to be focused more on Christmas dinner than risk appetite, which isn't a bad thing when you think about it.
More signs of thawing in US-China trade tensions China issued a new list for tariff exemption on US products, to waive tariffs on some US chemical goods.
The news about Trump's impeachment in the House provided little market reaction as his acquittal in the upcoming Senate trial is all but certain.
The Bank of Japan
The BoJ left its monetary policy unchanged earlier today, as expected. BoJ Kuroda says downside risks are significant for Japan's economy, and that it is appropriate to keep the central bank's policy stance tilted towards easing. This isn't a particularly new revelation; hence the market isn't moving. I still think BoJ policy is attached at the hip to the level of the yen, so if the USD/JPY moves significantly lower, only then will the BoJ ease.
The Pound
Look for short covering into the BoE as the big question is: how has the election, with its overwhelming majority for PM Boris Johnson, changed the BoE's thinking?
GBP/USD continued to trade with an offered tone as the " Tory Glory " election relief rally has given way to the uncertainty of the next stages of the Brexit process. UK-EU trade negotiations, and the tight proposed deadline at the end of the transition period. UK retail sales data and the BoE were delivered. No change occurred, but the split of the vote may set the short-term outlook on the pound.
Back in November, when the BoE launched its revamped Monetary Policy Report, the MPC voted by 7-2 to keep rates on hold, with Michael Saunders and Jonathan Haskel voting to cut rates to 0.50%. Their colleagues may not have agreed with them that an immediate rate cut was needed, but the committee did sound dovish.
Australian Dollar
Australian Employment Rose 39,900 In Nov.; Est 15,000
AUD/USD went to 0.6883 from 0.6860 on the back of the Australian labor market data. Traders were likely a bit short from the day before when RBA opened the door to another interest rate cut as early as February, should household incomes stay depressed or the labor market takes a turn for the worse. But the Aussie has remained firm since the rate cut narrative will continue to swivel on the jobs markets data.
Gold markets
After the Impeachment bounce, gold struggled to move higher for much of the day. A stable dollar and the firm US yields continued to undermine the intersession gold rally.
Despite reasonable offers on top, Gold prices look sticky below spot, holding well above USD1,470/oz intraday support. The sell-off from the phase one trade agreement and Conservative victory in the UK was not steep, and with risk around those events remaining, Gold should stay bid on the dip to crucial support levels.
Still, last week's events, agreement of the P1 deal between US and China and BoJo's landslide in the UK elections, have removed quite a lot of the uncertainties in the outlook for 2020 and with the reflation trade gather steam could struggle for momentum into the New Year as global bonds could remain under pressure