FOMC Speeches Ahead

Chinese industrial production figures for the month of October released yesterday showed a modest decline, rising only 5.60%, below estimates of 5.80% and down from 5.70% in the prior month. Retail sales numbers were however upbeat, rising 11.00% during October and indicative of a larger shift from an export oriented market to more of a consumer oriented economy. The moderate trend of numbers continues to point to a sluggish economic growth from the world's second largest economy. Taken along with the ongoing deflation in producer prices and further deceleration of consumer inflation growth, the People’s Bank of China is likely to announce further rate cuts along with another possible reduction in the bank reserve requirements ratio within the quarter. USDCNH tested the highs of 6.3990 before giving back the gains and closing on a bearish note at 6.3890.

Surprising the median estimates, Australia’s unemployment numbers released earlier today showed a strong report overall. The unemployment rate fell to 5.90%, from 6.20% previously while the payroll change for the month jumped by 58,600 along with a modestly upward revision to the previous month’s employment change from -5,100 to -800. The biggest contributing factor to the jobs report was a surge in full-time employment despite the participation rate falling from 65.00% to 64.90%. The overall strong jobs numbers saw the Australian Dollar surge across the board as the market participants expect the RBA to delay any further rate cuts in the next two quarters with the implied probability of any December rate drop now standing at zero. AUDUSD touched a session high of 0.7144 before the currency started to retrace some of the gains of nearly 1.00% after the news hit the wires.