USD/INR Strengthens On Persistent Outflows, Firmer US Dollar

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First Impressions: The WPI rose 0.8% in the September quarter, on par with Westpac’s forecast and below the market consensus of 0.9%. The market range was from 0.8% to 1.0%. On an annual basis, wages are up 3.5%yr, down from 4.1%yr in June and the peak of 4.2%yr in December 2023. Wage inflation has continued to moderate through 2024, with the six-month annualised pace holding at 3.2%yr compared to 4.9%yr in December 2023. There are no changes to Westpac’s wage forecasts.

In the September quarter, the Wage Price Index (WPI) rose 0.8% (3.5%yr), on par with Westpac’s forecast but a touch softer than the market consensus of 0.9%. It is also below the RBA’s expectation which pointed to a 0.9%qtr rise in both the September and December quarters of 2024. Wage inflation peaked at 4.3%yr in December 2023 and has been drifting lower through 2024, with the six-month annualised pace dropping from 4.9%yr in December 2023 to 3.2%yr in September 2024.

The more critical private sector wages rose 0.8% and this time, was also matched by a 0.8% increase in public sector wages.

The ABS provides (in non-seasonally adjusted terms) the contributions to the quarterly increase in the WPI from Awards, Enterprise Bargaining and Individual Arrangements. Comparing September 2024 to September 2023, the contribution from Enterprise Bargaining has softened to a contribution of 0.46ppt compared to 0.66ppt a year earlier. Individual Arrangements continue their downtrend, contributing 0.59ppt compared to a September 2023 print of 0.74ppt. Meanwhile, the Awards/Minimum Wage contribution was just 0.36ppt compared to 0.63ppt a year earlier.

As the Wage Price Index came in just as Westpac expected, we see no reason to change our end 2024 forecast of 3.2%yr and the June 2025 forecast of 2.9%yr. The RBA is currently forecasting annual wages growth to print 3.4%yr for end 2024 and hold at that rate through to June 2025.

Korea added less than 100,000 jobs in October for the first time in four months primarily due to a slowdown in the wholesale, retail and construction sectors, data showed Wednesday.

The number of employed people aged 15 years and older came to 28.85 million as of end-October, up 83,000 from a year earlier, according to the data compiled by Statistics Korea.

In July, monthly job additions exceeded 100,000 for the first time in three months, reaching 172,000. This was followed by increases of 123,000 new jobs in August and 144,000 in September.

October's on-year increase marks the smallest monthly gain since May, when the country reported an 80,000-job increase.

The slower job growth in October was mainly due to job losses in sectors like wholesale and retail, as well as construction, despite gains in health care, education, and science and technology.

Employment in the wholesale and retail sectors dropped by 148,000 compared with the same month last year, continuing a downward trend for the eighth consecutive month.

The monthly decline is also the largest since July 2021, when 186,000 wholesale and retail jobs were lost.

The number of people employed in the construction sector fell by 93,000 in October, marking six straight months of decline, according to Statistics Korea.

"The decrease in retail jobs appears to have extended to wholesale sectors as well," Suh Woon-ju, a Statistics Korea official, said in a press briefing.

In contrast, new hiring in the public health and social welfare field gained 97,000 on-year last month, and jobs in the science and technology service sector went up by 77,000.

October's job growth was also led by more positions for older adults.

Jobs for those aged 60 and older rose by 257,000 on-year, and those for people in their 30s and 50s climbed 67,000 and 12,000, respectively.

But those in their 20s had 175,000 fewer jobs last month, and people in their 40s also saw jobs decline by 72,000 on-year, the agency said, adding the overall number of people in the two age groups has also fallen. (Yonhap)

Source: Koreatimes

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US Inflation Expected to Dominate Traders’ Event Calendar

No clarity from BoJ summary of opinions

The Bank of Japan summary of opinions indicated a lack of clear direction regarding the timing of a rate hike. This will leave traders guessing as to whether the BoJ will wait until early next year, which seems the most likely scenario. Still, a December hike is on the table, as inflation remains high and the yen is struggling. At the same time, the political instability in Japan and the transfer of power in the US has resulted in considerable political uncertainty, which supports the case to hold rates until next year.

The BoJ has never made transparency a priority, in stark distinction to the Federal Reserve which took pains to telegraph its intent to lower rates earlier this month. The BoJ has surprised the markets in the past, which could be part of its effort to discourage yen speculators.

The BoJ meets next on Dec. 19 and key data such as inflation and GDP will be important factors ahead of the rate decision at the December meeting. As well, wages have been rising and the BoJ is hopeful that will translate into increased consumer spending and demand-driven inflation. Consumer spending makes up more than half of the economy and BoJ is unlikely to make further rate hikes until it sees stronger consumer spending.

In the US, there are no major events on the data calendar but investors will be listening closely as a number of FOMC members make public remarks today. The Federal Reserve is expected to continue to trim rates, with the markets pricing in a cut of 25 basis points at 65%, according to the CME’s FedWatch.

USD/JPY Technical

There is resistance at 154.76 and 155.57;

USD/JPY tested support at 1.5425 earlier. Below, there is support at 153.44.

Source: MarketPulse

Brent crude oil prices have continued to slip, touching 71.74 USD a barrel on Tuesday. This marks a downturn influenced by China’s underwhelming stimulus measures. The market’s lack of confidence in China’s rejuvenation efforts, coupled with persistently weak inflation and subdued energy demand within the country, has led to this downturn.

Compounding the downward pressure on oil prices, the US dollar’s strength makes commodity investments less attractive, as a robust USD typically dampens demand for dollar-priced assets like oil. However, the geopolitical landscape, which often serves as a driver for oil price volatility, appears stable for now. With reduced tensions in the Middle East, some risk premiums previously embedded in Brent prices have been alleviated.

Investors eagerly anticipate the monthly OPEC report expected later today, which is set to provide deeper insights into the supply-demand dynamics. This report has the potential to influence market sentiments significantly and is a key focus for investors as they consider global oil demand forecasts for 2025.

Brent technical analysis

On the H4 chart of Brent, the market continues to develop a broad consolidation range around the level of 73.66, extending to the level of 71.33. Today, we expect a growth link to the level of 73.66. After reaching this level, developing another downside structure to 71.22 is possible. Further, we will consider the probability of the beginning of the growth wave development to 76.00, with the prospect of the trend’s continuation to 80.80, the local target. Technically, this scenario is confirmed by the MACD indicator. Its signal line is under the zero level and is directed downwards.

On the H1 Brent chart, the market has formed a consolidation range around 73.66 and worked out a downward wave to 71.33, the local target. Today, a correction link for this downward wave is likely with a target at 73.66, followed by another wave of decline to 71.22. At this point, the potential of the downward wave can be considered exhausted. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under 50 and is directed strictly downwards to 20.

Source: RoboForex Ltd