The Iberian Peninsula Grabs Headlines

The US dollar is firm within fairly narrow amounts that have prevailed this week as the market consolidates its recent gains.  Draghi's comments to the Western Parliament are similarly dovish in tone to the October post-ECB press meeting.  Sterling posted outsized gains yesterday, pressing above $1.5200, and those gains extended to almost $1.5250 today before sterling sold back to $1.5175, leaving it almost flat against the euro.

Japanese machinery orders rose 7.5% in September, more than twice the Bloomberg consensus estimate, and completely recouping the 5.7% decline within August.  The Nikkei was upward fractionally, led by utilities and tech while the decline in oil prices weighed around the energy sector.  The dollar has been confined to about a third of a yen range.  Thus far it has the makings of the third consecutive lower higher, and also the greenback did make new lows for the week near JPY122.Seventy five.  With sizable options struck at JPY123 expiring today through Mon, this area will be pivotal.

The Australian dollar is easily the best performing major currency, gaining about 1% against the US dollar today.  The actual Aussie rose to almost $0.7155, levels for the week and the 20-day shifting average by a stellar work report.  It is true that Australia's employment report tends to be unstable, and today's report might overstate the case, but the underlying movement is in the right direction.  The RBA recently recognized improved financial prospects, and specifically cited the labor market.

Australia increased 58.6k jobs in October, nearly four times more than anticipated, and of these 40k were full-time jobs.  On top of that, the September series revised to show less weakness.  The unemployment rate fell back to 5.9% from 6.2%, totally unexpectedly, and this is despite the rise in the participation price to 65.0% from Sixty four.9%. 

Politics in the Iberian Peninsula have attracted market attention this week.  After the fall of the minority center-right government within Portugal, the world awaits a brand new government.  DBRS is the only ECB-recognized score agency that gives Portugal an investment grade rating.  It is established to review it tomorrow and also at a minimum, anticipate a cut in the outlook.  A loss of their investment grade status, however, could make Portuguese bonds unacceptable for QE participation and cheap financing by the ECB.  Portugal's 10-year yield is off 5 bp today leaving it up about 7 bp over the past week.  

In The country, the confrontation between independent-bent Catalonia and Madrid sharpened.  Meanwhile, the latest polls ahead of next month'utes election shows Podemos support slipping toward 10%, but the new centrist Ciuadanos from 21%, which is roughly half of what the PP drew, and leaves the judgment party with 26.5% support.  The Socialists are close with 24%.

The North American focus will be on the Federal Reserve.  Over the course of the day, no fewer than six Fed authorities will speak.  Yellen starts your day around the time the equity marketplace opens, and Fischer surface finishes the day a little before the Tokyo, japan open on Friday.  The big apple Fed President Dudley is talking shortly after midday.  While additional Fed officials offer insight, we continue to place focus on the signals from the Fed's leadership.  Yet besides them, Lacker, a voting hawk and Ballard, a non-voting hawk talk.  Among these five officials, we expect a reiteration of the FOMC statement and the prospect for a move next month.  Chicago Fed's Evans continues to be among the doves, but he have softened his position lately.

Dollar Firms, though Strong Work Lifts Aussie, Awaiting Fed-Speak is actually republished with permission from Marc to Market