Monday: 5 Things Markets Are Talking About

It’s decision day for the yuan, the world’s biggest pension fund loses $64 billion and a huge week is coming up. Here are some of the things people in markets are talking about today.

1. IMF decides on the yuan

At its executive meeting today in Washington, the IMF will decide whether to grant China’s yuan status as a reserve currency by adding it to the fund’s Special Drawing Rights (SDR) basket. The decision is almost certain to be to include the yuan after IMF Managing Director Christine Lagarde said on Nov. 13 that the organisation’s staff backed inclusion. The offshore yuan jumped on suspected central bank intervention overnight as the discount to the onshore price briefly widened to its largest since September.

2. The world’s biggest pension fund loses $64 billion

Japan’s Government Pension Investment Fund lost $64 billion in the stock market rout in August and September, documents released in Tokyo this morning show. The 135.1 trillion yen ($1.1 trillion) fund declined 5.6 percent in the last quarter, the largest in comparable data starting from April 2008. There was a mixed bag of data from Japan on Monday, with retail sales beating expectations while industrial production rose less than forecast.

3. Metals hammered

Iron ore futures in Singapore fell below $40 a metric ton for the first time as concern persists over the economic slowdown in China. Copper, meanwhile, is set to close today below its 200 month moving average for the first time since 2003. BHP Billiton Ltd. fell to a seven year low in London this morning after Brazil said it would seek as much as 20 billion reais ($5.2 billion) in compensation for a dam collapse at an iron ore mine which has left 13 dead and six missing.

4. Oil slump fallout

Lukoil, Russia’s second largest oil producer reported a bigger than expected 62 percent drop in third-quarter profits this morning amid a persistent global supply glut. Oil bulls even have the weather against them as the Atlantic hurricane season ends without a single major event in the Gulf of Mexico to lift prices. West Texas Intermediate for January delivery was 1.29 percent higher at $42.24 a barrel on the New York Mercantile Exchange at 11:15 a.m. London time ahead of this week’s OPEC meeting on Friday that is expected to maintain production at current levels.

5. A huge week ahead

It’s not just the OPEC meeting that will keep investors busy. It is hard to overstate the importance of events on Thursday and Friday, which will dominate conversations throughout the week. On Thursday the European Central Bank is due to make its monetary policy decision, with very high expectations for further easing following President Mario Draghi’s priming of the market. Also on Thursday, Fed Chair Janet Yellen will speak to congress, then on Friday morning the last jobs report ahead of the expected start of Fed tightening later in the month is due to be published. Meanwhile there will be plenty of U.S. economic data coming throughout the week.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell