USD/JPY plunges to 1-1/2 week lows, farther below mid-113.00s • USD weighed down by uncertainty over the US tax plan.
• Risk-off mood boosting Yen’s safe-haven demand.
The USD/JPY pair extended its rejection slide from the 114.00 handle and tumbled to 1-1/2 week lows, around the 113.30-25 region in the past hour.
Mounting uncertainty surrounding the Republican-led tax-cut legislation continued exerting some downward pressure on the US Dollar through the mid-European session.
• USD consolidates as the US fiscal drama plays out – BBH
Adding to this, a sudden selling wave across European equity markets, pointing to risk-off mood, provided an additional boost to the Japanese Yen's safe-haven appeal and collaborated to the pair's sharp fall to its lowest level since Oct. 31.
Meanwhile, the market seems to have largely ignored a goodish pickup in the US Treasury bond yields, with reviving safe-haven demand and broad-based USD weakness turning out to be key determinants of the..Read More →

Regulatory efforts must be adopted now, when the euro area economy is in strong shape, to avoid a massive build-up of bad bank loans in future, the European Central Bank's Chair of the Supervisory Board Daniele Nouy said Thursday.
The ECB had floated new guidelines regarding extra provisioning by banks for bad loans. These guidelines are open for public consultation until December 8.
“It is clear that we cannot only focus on the existing NPL [non-performing loan] stock, but that we need to ensure that a similar build-up of NPLs will be avoided in the future,” the ECB's top official said in a hearing at the European Parliament in Brussels.
“Now is the right time for such an additional step given that we currently have very favorable economic conditions in Europe.”
“We need to exploit this momentum by taking forward-looking actions now, during these increasingly good times,” she added.
Regarding Brexit, Nouy expressed concern that many banks are still delaying their final ..Read More →

Greece industrial production declined at the fastest pace in more than a year in September, the Hellenic Statistical Authority reported Thursday.
Industrial production fell by seasonally adjusted 3.4 percent in September from August, when it grew 2.9 percent. This was the biggest fall since May 2016, when output slid 3.9 percent.
On a yearly basis, industrial production growth slowed to 2.4 percent from 5.5 percent in August.
Mining and quarrying output surged 15.3 percent annually and manufacturing output gained 1.3 percent. Electricity output advanced 4.2 percent, while the water supply production index dropped 1.2 percent.Read More →

The pound dropped against its major rivals in early European trading on Thursday, as investors focused on the Brexit talks resuming in Brussels later in the day amid insufficient progress on main divorce terms to move on to discussions of a future trade deal.
Both EU and U.K. officials will meet for a sixth round of talks over issues related to financial settlement, as well as rights for EU citizens and the Irish border. Discussions on transition period and the framework of a future trade relationship are also formally on the agenda.
The EU leaders are insisting that the U.K. should agree to pay ?60 billion as the financial settlement before moving talks on to a future relationship.
EU chief negotiator Michel Barnier warned that “more progress” is needed on the first phase of the process.
European shares fell as U.S. tax reform worries and simmering Middle East tensions kept traders on tenterhooks.
Survey by the Royal Institution of Chartered Surveyors showed that the U.K. house p..Read More →

Ireland's consumer price inflation rose to its highest level in six months during October, data from the Central Statistics Office showed Thursday.
The consumer price index climbed to 0.6 percent year-on-year after rising 0.2 percent in September. Price rose for a third straight month and the rate was the highest since April, when inflation was 0.9 percent.
Compared to the previous month, the CPI dropped 0.1 percent in October after falling 0.6 percent in September. Prices decreased for a second straight month.
The harmonized index of consumer prices, or HICP, rose 0.5 percent year-on-year after a 0.2 percent gain in the previous month. The climb was the fastest since April, when prices rose 0.7 percent. The EU measure of inflation fell 0.1 percent month-on-month after a 0.6 percent slump in September.Read More →

Inflation and 10-year rate: Surprises are all that matter – Natixis Currently, European interest rate levels depend rather more on inflation than on growth indicators and since July of this year, the trajectory of the Eurozone 10-year rate (Data stream benchmark) has trended downwards, the spreads between the US and EZ 10-year rates widening since the start of September (from 173bp then to more than 200bp at the end of November), points out the research team at Natixis.
Key Quotes
“Divergences in monetary policies are one of the explanations for all this (Federal Reserve announced a balance sheet normalisation and is continuing to raise the Fed Funds rates, whereas the ECB has announced a QE extension), but not the only one. Of late, the trajectory of Eurozone interest rates (compared to average level on a 12-month rolling basis) is no longer correlated to the macroeconomic news flow.”
“This configuration is not a one-off. In particular, since 2012, there have been three periods whe..Read More →

AUD: 0.7625/30 support should hold near term – Westpac AUD/USD hasn’t been able to return to its pre-retail sales data level of 0.7715 and probed as low as 0.7627 on Tue after the slightly more wary RBA statement, points out Sean Callow, Research Analyst at Westpac.
Key Quotes
“Market pricing for an RBA rate hike doesn’t rise above a cumulative 50% until Aug 2018.”
“But it’s one thing to trim pricing for RBA tightening in 2018, another to get serious about a rate cut – the latter has not happened and remains very unlikely even after the soft Q3 CPI and this week’s reweighting.”
“Indeed AUD/USD support at the 4 month lows of 0.7625/30 has looked very solid this week. It should hold near term so long as global risk appetite remains upbeat and the US 10 Treasury yield doesn’t make another surge through 2.40%. But probes above 0.7700/20 seem likely to be sustained only if the US dollar comes under broad pressure or commodities turn from recent consolidation to sharp deterioration.”Read More →