Holidays across the Asia region meant we had another quiet, range-bound session today. Activity and data flows were subdued with the only action seeing EURUSD falling back through the 1.27 level though there was no specific news item or event to drive the move. The US dollar and the Yen were generally better bid with most of the open Asian equity markets in the red on a broader risk-off trade.
On the data front, Australia’s business conditions and confidence deteriorated in October. Business conditions (a measure of hiring, sales and profits) slumped to their lowest level in 3 years (to -5 from -3) despite the RBA’s last 25bp cut on October 2. Business confidence was also weaker as the index slid to -1 from zero with pessimism apparent in the mining and construction sectors. The weak report is adding to the case for an early Christmas present from the RBA at next month’s meeting on December 4. Interest rate markets are now suggesting a 60 percent chance of a 25bp cut which weighed marginally on the AUD.
UK house prices declined at the slowest pace in over 2 years in October, according to the recent survey from RICS. The index rose to -7 from -14 in September while at the same time the index measuring enquiries from new buyers rose to 18 from 5. In a familiar trend, house prices in London and the Southeast recorded positive price balances. While it by no means suggests the UK housing market is out of the woods, this report indicates an element of stabilization.
There was also not much activity to report from the overnight session as the US Veterans day holiday impacted both volatility and activity. EURUSD attempted another dip below 1.27 early in the European session but the pressure soon petered out. After the Greek parliament passed the 2013 budget, a draft of the Troika report was released which held a marginally positive tone but did caution that Greece will still need an extra €17.6 bln of funding in 2015-16 even if it is given an additional 2 years to reach budgetary targets. AUD maintained a bid tone throughout the session on rumours of sovereign demand for reserve diversification.
NZ Oct. Food Prices out at -0.6% m/m vs. -0.9% prior
UK Oct. RICS House Price Balance out at -7% vs. -15% expected and revised -14% prior
AU Oct. NAB Business Conditions out at -5 vs. -3 prior
AU Oct. NAB Business Confidence out at -1 vs. 0 prior
Upcoming Economic Calendar Highlights
JP Industrial Production (0430)
JP Capacity Utilization (0430)
Swiss Producer/Import Prices (0815)
Sweden CPI (0830)
UK ONS House Prices (0930)
UK PPI Input/Output (0930)
UK CPI/RPI (0930)
GE ZEW Surveys (1000)
EU ZEW Survey (1000)
US NFIB Small Business Optimism (1230)
US IBD/TIPP Economic Optimism (1500)
US Monthly Budget Statement (1900)