Moody's Downgrade on China Weighs on Commodity Currencies, AUD Leads Decline
| Action Insight Mid-Day Report 12-5-23 |
Moody's Downgrade on China Weighs on Commodity Currencies, AUD Leads Decline |
Commodity currencies, particularly Australian Dollar, are experiencing notable selling pressure today. However, it should be noted that European investor sentiment, while not explicitly full-blown risk-on, clearly lacks the typical features of risk aversion. In the US, futures markets are just slightly down, indicating a cautious rather than outright negative sentiment among traders. This subdued response across markets suggests that investors are not engaging in widespread risk aversion but are instead selectively cautious. A key factor influencing market sentiment is the today's decision by Moody's to downgrade its outlook on China's government credit ratings from stable to negative. This adjustment reflects increasing expectations that the Chinese government will be compelled to provide additional financial support to heavily indebted local governments and state-owned enterprises. According to Moody's, this necessity poses significant risks to China's overall fiscal, economic, and institutional integrity. The statement from Moody's emphasizes concerns about "structurally and persistently lower medium-term economic growth" and challenges within China's property sector, indicating broader economic issues that could impact global markets... |
EUR/USD Mid-Day Outlook Daily Pivots: (S1) 1.0795; (P) 1.0845; (R1) 1.0886; More... EUR/USD's fall from 1.1016 is still in progress and intraday bias remains on the downside. Next target is 55 D EMA (now at 1.0770. Sustained break there will target 1.0447 support next. On the upside, above 1.0912 minor resistance will turn intraday bias neutral again first. Further break of 1.1016 will resume the rise from 1.0447 to retest 1.1274 high instead. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:30 | JPY | Tokyo CPI Y/Y Nov | 2.60% | 3.30% | 3.20% | | 23:30 | JPY | Tokyo CPI ex Fresh Food Y/Y Nov | 2.30% | 2.40% | 2.70% | | 23:30 | JPY | Tokyo CPI ex Food Energy Y/Y Nov | 3.60% | 3.80% | | 00:30 | AUD | Current Account (AUD) Q3 | -0.2B | 3.5B | 7.7B | 7.8B | | 01:45 | CNY | Caixin Services PMI Nov | 51.5 | 50.8 | 50.4 | | 03:30 | AUD | RBA Interest Rate Decision | 4.35% | 4.35% | 4.35% | | 07:45 | EUR | France Industrial Output M/M Oct | -0.30% | -0.20% | -0.50% | -0.60% | | 08:45 | EUR | Italy Services PMI Nov | 49.5 | 48.2 | 47.7 | | 08:50 | EUR | France Services PMI Nov F | 45.4 | 45.3 | 45.3 | | 08:55 | EUR | Germany Services PMI Nov F | 49.6 | 48.7 | 48.7 | | 09:00 | EUR | Eurozone Services PMI Nov F | 48.7 | 48.2 | 48.2 | | 09:30 | GBP | Services PMI Nov F | 50.9 | 50.5 | 50.5 | | 10:00 | EUR | Eurozone PPI M/M Oct | 0.20% | 0.20% | 0.50% | | 10:00 | EUR | Eurozone PPI Y/Y Oct | -9.40% | -9.40% | -12.40% | | 14:45 | USD | Services PMI Nov F | 50.8 | 50.8 | | 15:00 | USD | ISM Services PMI Nov | 52.6 | 51.8 |
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