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As with the current week, thin market trades are expected to continue into the end of the year. The momentum of price movements could be further stumped with a vacuum of central bank meetings and tier-1 data from the markets. The only exception lies with Japan and China in the Far East.
The markets appear to continue playing to the tune of ‘All I want for Christmas is yield’, alas from developed markets, as funds departed from emerging markets. Higher yields in developed economies have tipped the scale in their favor, channeling funds which have previously ventured into riskier emerging markets in the search for yield back.The theme of the stronger US dollar, reignited since the December 14 Fed FOMC meeting, has also kept Asian market currencies depressed into the end of the year.
US markets will be closed on Monday but will see a couple of data indicators in the week including December conference board consumer confidence, November pending home sales and wholesale inventories. The current market consensus for December’s conference board consumer confidence sits at 108.5, higher than November’s figure which was the most confident print in nine years. A surprise on the upside could still bring about further USD strength, albeit at subdued levels amid thin markets.
The key data for Asia comes from Japan in the upcoming week. Early Tuesday brings about Japan’s November jobless rate which is expected to remain steady at 3.0% from the two months prior. Job-to-applicant ratio is likely to remain unchanged as well based on Bloomberg’s market consensus, indicating that the job market conditions remain steady and tight, which is likely to help in pushing up the inflation rate. Tuesday will also see Japan’s November’s national inflation rate, expected to accelerate to 0.5% YoY from 0.1% YoY previously, reinforcing a positive inflation outlook.
Japan’s November industrial production will also be released on Wednesday and a surge in the growth rate has been expected in the market at 4.7% YoY from negative territory which could help the rally in the Japanese stock market.
Other than the Chinese manufacturing PMI data to be released over the weekend, Asian markets could otherwise see a quiet end to the year.