• Asian equity markets were mostly subdued after the holiday closure stateside and amid continued trade uncertainty
• Hong Kong Polytechnic University siege was confirmed to have ended as police swept through a vacant but devastated campus yesterday
• USD was lacklustre amid the holiday-quietened conditions, EUR/USD consolidated at the bottom end of the 1.1000 handle, momentum in GBP/USD faded
• Looking ahead, highlights include Swedish GDP (Q3), EZ CPI (Flash) & Unemployment Rate, Canadian GDP, Black Friday, ECB’s de Guindos & de Cos, early US close

ASIA-PAC

Asian markets were mostly subdued after the holiday closure stateside for Thanksgiving Day and amid continued trade uncertainty, despite a more conciliatory tone from China’s State Council and with the retaliation so far to US President Trump's Hong Kong bill signing seen as a mere slap on the wrist. ASX 200 (-0.3%) initially prodded record levels but with gains later reversed by underperformance in miners and the largest weighted financials sector, while the opening gains for the Nikkei 225 (-0.5%) eventually succumbed to the pressure from currency flows and substandard data in which Industrial Production matched its worst contraction since January last year. Hang Seng (-2.1%) and Shanghai Comp. (-0.9%) declined as markets second-guessed China’s retaliation measures for the HK bill and after PBoC’s inaction this week resulted to a CNY 300bln net liquidity drain, with the losses in the Hong Kong benchmark exacerbated as all its components resided in negative territory following the recent increased IPO activity and as the city braces for a resumption of protests over the weekend. Finally, 10yr JGBs weakened in an extension of yesterday’s post-2yr auction selling pressure and with demand also kept subdued by the lack of BoJ presence in the market, as well as mixed Japanese data releases.

PBoC skipped open market operations for a net weekly drain of CNY 300bln vs. Prev. CNY 300bln injection last week. (Newswires) PBoC set CNY mid-point at 7.0298 vs. Exp. 7.0288 (Prev. 7.0271)

Hong Kong Polytechnic University siege was confirmed to have ended as police swept through a vacant but devastated campus yesterday, while there were separate reports that Hong Kong is said to gear up for a weekend of protests following lull in violence. (WSJ/Straits Times)

BoK kept 7-Day Repo Rate unchanged at 1.25% as expected with board member Shin the lone dissenter, while BoK Governor Lee suggested the local economy is seen as passing the bottom. Furthermore, BoK lowered 2019 GDP growth forecast to 2.0% from 2.2% and 2020 GDP to 2.3% from 2.5%. (Newswires)

South Korea Trade Ministry said it agreed to hold senior-level talks with Japan during 3rd week of December with talks aimed at exchanging views on export controls and resolve pending issues,  while a senior official also stated they will try to reverse the trade curbs taken by South Korea and Japan since July. (Newswires)

Japanese Tokyo CPI (Nov) Y/Y 0.8% vs. Exp. 0.4% (Prev. 0.4%). (Newswires) Japanese Tokyo CPI Ex. Fresh Food (Nov) Y/Y 0.6% vs. Exp. 0.6% (Prev. 0.5%) Japanese Tokyo CPI Ex. Fresh Food & Energy (Nov) Y/Y 0.7% vs. Exp. 0.7% (Prev. 0.7%) Japanese Industrial Production (Oct P) M/M -4.2% vs. Exp. -2.1% (Prev. 1.7%); matches worst reading since January 2018. Japanese Industrial Production (Oct P) Y/Y -7.4% vs. Exp. -5.3% (Prev. 1.3%)

UK/EU

UK PM Johnson suggested there will not be a trade agreement with the US if President Trump wants the NHS on the table and that the NHS is more important than a trade deal with US. (Newswires/ITV)

Spain’s Socialist said it had constructive dialogue with Catalan separatist party ERC at meeting on formation of a new government and next meeting will be held on 3rd December. (Newswires)

UK GfK Consumer Confidence (Nov) -14.0 vs. Exp. -14.0 (Prev. -14.0). (Newswires) UK Lloyds Business Barometer (Nov) 9 (Prev. 6)

FX

USD was lacklustre with price action kept rangebound amid the holiday-quietened conditions in US and with the currency also unmoved from China’s conciliatory tone and suggestions it is leaving the door open for a trade deal. The greenback’s transatlantic peers were also uneventful in which EUR/USD consolidated again at the bottom end of the 1.1000 handle, while the momentum in GBP/USD following the YouGov MRP projection has all but faded with the pair languishing near 1.2900 after having failed to surmount the post-poll high of around 1.2950. /JPY slightly pulled back after mixed data including firmer than expected headline Tokyo CPI coupled with abysmal Industrial Production numbers, and antipodeans were slightly choppy following varied second-tier data releases, while a bout of heavy selling pressure was seen in USD/MXN early in the session despite no news catalyst which was attributed to technical selling in thin conditions, following a break of this week’s uptrend line in the hourly chart.  

Chilean Central Bank announced a USD 20bln FX intervention in which it will sell USD 10bln in spot market and will offer USD 10bln in FX hedges. (Newswires)

Australian Private Sector Credit (Oct) M/M 0.1% vs. Exp. 0.3% (Prev. 0.2%). (Newswires)

Australian Private Sector Credit (Oct) Y/Y 2.5% vs. Exp. 2.7% (Prev. 2.7%)

New Zealand ANZ Consumer Confidence Index (Nov) 120.7 (Prev. 118.4). (Newswires)

New Zealand ANZ Consumer Confidence (Nov) M/M 1.9% (Prev. 4.0%)

New Zealand Building Permits (Oct) M/M -1.1% vs. Exp. -2.5% (Prev. 7.2%)

COMMODITIES

Commodities were mixed with WTI crude futures subdued by the broad risk averse tone as well as the lack of participants and pertinent newsflow which saw prices retreat to below the USD 58.00/bbl level. Conversely gold marginally benefitted overnight due to its safe haven status and softer greenback, while copper prices reflected the holiday conditions and underperformance in the Greater China region.

GEOPOLITICS

US President Trump said Taliban peace talks are to resume and that US is substantially drawing down its troops in Afghanistan during a surprise visit to the country. (Newswires)

US

Thanksgiving holiday saw very thin trade with cash markets closed in both equities and bonds. The Thanksgiving holiday saw a lack of any pertinent updates in the day. However, last night US President Trump signed the HK bill as expected, implying a sell-off in US equity futures as participants were concerned regarding the potential implications to trade talks. The Chinese were quick to vow to retaliate, however the retaliation is likely to put the drafters of the bill on an entry ban to Mainland China, Hong Kong & Macau, according to China Global Time. The retaliation, so far, appears not so severe, potentially a promising sign. Over in the UK, YouGov released its MPR model, which put Conservatives at a 68-seat majority, the results put a bid into GBP pushing cable to test resistance at 1.2950, before paring back to 1.29 during the day as USD strengthened slightly and gradually.