Talking Points:

Australian Dollar Narrowly Weaker on Chinese Industrial Production Data
European, US Economic Calendars Offer Little to Drive Market Volatility
Diminished Holiday Season Liquidity May Amplify Knee-Jerk Price Action

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The major currencies were little-changed against the US Dollar in overnight trade. The Australian Dollar narrowly underperformed after Chinese Industrial Production slowed more than economists expected. Output grew 10 percent year-on-year in November, falling short of the 10.1 percent increase being penciled in ahead of the release and amounting to the weakest reading in four months. China is Australia’s top trading partner and signs of slowing activity there bode ill for the latter country’s pivotal mining export sector.

The economic calendar is relatively quiet in European trading hours. UK Industrial Production and Trade Balance figures seem unlikely to generate a meaningful response from the British Pound given their relatively limited implications for the direction of near-term Bank of England monetary policy. Meanwhile, EU finance ministers are set to meet to continue work on the Single Resolution Mechanism (SRM) for Eurozone banks. A final accord is not until May, so the emergence of major policy innovation seems unlikely. Separately, the final revision of third-quarter Italian GDP is set to confirm output shrank 0.1 percent in the three months to September.

The US data docket is less eventful still, with October’s JOLTs Job Openings figure amounting to the only bit of noteworthy event risk. Although the indicator has gained a bit of prominence recently since it emerged that incoming Fed Chair Janet Yellen is fan, it seems unlikely that this release will succeed where higher-profile data (notably, last week’s Employment report) failed in overcoming year-end seasonal forcesto generate meaningful follow-through. With that said, diminished liquidity can amplify knee-jerk volatility in the event that investors are spooked by unforeseen headline risk, so caution is in order.

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