Market wrap

There was little news-flow of importance to galvanise markets last night. The Eurostoxx 50 closed down 0.1%, and the S&P500 is currently unchanged although it did eke out a fresh six-month high at the NY open. Accounts of an unscheduled meeting between the Greek PM and the IMF troika to finalise the rescue package may have supported the earlier positive mood, while reports the ECB’s governing council is divided on its contribution to the Greek debt deal as well as a Standard and Poor’s comment that most EZ countries have a 1/3 chance of a downgrade may have later done the converse. The CRB commodities index is currently down 0.2%, with oil +0.2%, copper +0.6% and gold -1.0%. US 10yr treasury yields traded in a 1.96%-2.00% range and are currently unchanged at 1.98%.

The US dollar index is little changed. EUR probed slightly higher to 1.3289 during the early London session but failed to press on. USD/JPY bounced between 76.70 and 77.20, firmer on the day. AUD made a fresh six-month high at 1.0845 during the London session, slipping to 1.0768 in NY. NZD made a five-month high at 0.8407 around the NY open but then fell with the prevailing sentiment to 0.8326. AUD/NZD was rangebound between 1.2900 and 1.2950.


Economic wrap

No US data report.

Canadian housing starts slipped 1% in Jan as an 8% fall in single family urban house starts was off set by a rebound in rural area starts.

German exports slumped 4.3% in Dec, their second steep fall in three months, to end the year on a weak footing, consistent with the slowdown in orders, production and the probable contraction in GDP growth.

UK BRC shop price index slowed from 1.7% yr to 1.4% yr in Jan. Non food price inflation was 0.0%, food prices were up 3.7% yr. With the VAT hike last year dropping out of the annual, calculation, most inflation measures for the UK will be sliding this year from recent highs.


Market outlook

AUD/USD and NZD/USD outlook next 24 hours: Locally, there is the NZ employment report to watch, with most economists tightly clustered around a 6.5% unemployment rate forecast. Then we have China’s CPI and PPI, and tonight’s ECB (no cut but any signal?) and BOE (how much new QE?) meetings. The AUD’s technical setup is unchanged - an overbought condition warns of a reversal but momentum remains positive, albeit weakening. Given its tired appearance, we think 1.0840 should cap price action today. Ditto for the NZD, which looks even more tired so that 0.8400 should hold today barring an employment surprise.