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German industrial production up 2.7% in September

Tue, Nov 10 2009, 06:15 GMT
by Westpac Institutional Bank Team

Westpac Institutional Bank  |  View company's profile

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Global equity markets reacted to the weekend’s G20 meeting which agreed to maintain stimulus efforts. US-based exporters, which have benefited from the cheaper dollar, outperformed, along with banks and financials, and the S&P500 is currently up 1.7%. Oil stood out among commodities, up 3.5%, partly due to a tropical storm in the Gulf of Mexico resulting in output cuts. Oil is yet to break above its three-week range. Gold maintained its uptrend to make a new high of $1111 (+0.8%), while copper was subdued (+0.4%). US 10yr treasuries rallied by 5bp after a solid 3yr auction, and the 2-10yr curve flattened similarly, perhaps correcting the post-October gains.

The US dollar weakened on better risk sentiment, as well as ongoing effects from the weekend’s G20 meeting (it failed to comment on dollar weakness), and is down 1.2% since the London open. EUR rallied sharply to 1.5020, Trichet’s comments that economic growth is a little better than expected checking the rise. The Dutch finance minister said EU states generally agreed 2011 is the best time to start exit strategies. USD/JPY saw little volatility around 90.00. CAD rallied sharply down to 1.0555, assisted by M&A talk around Microsoft and Canadian company Research In Motion.

AUD continued higher post-Sydney’s 0.9244 to reach 0.9308. A McCrann article had little on monetary policy.

NZD continued higher on the Fonterra payout news, from 0.7373 at NZ’s close to 0.7418. AUD/NZD did little, hovering above 1.2540 minor support.

The Fed Senior Loan Officer Survey found that fewer banks tightened lending standards in Q3. Banks reported lower demand for most loan types, aside from prime mortgages.

Euroland Sentix investor confidence rises from –12.6 to –7.0, the fourth consecutive gain. This was stronger than the consensus forecast for stalled confidence improvement, but the decent equity upswing seen in the last few days compares to softer stockmarkets in early November – down around 5% or so – and the survey was taken at the end of last week, whereas the forecasts for Sentix were made at the market’s recent nadir.

German industrial production up 2.7% in September. A solid result, especially given that consumer durables orders fell (i.e. less autos boost from scrappage schemes) but capital goods orders were strong.

Canadian housing starts rose 5.4% in October, reversing the September drop to (just) reach the highest level so far this year. Single family house starts pulled back after two months of double-digit gains, while the volatile multiples component rose by 13.8%.

Outlook

AUD/USD and NZD/USD outlook today: AUD today is again a ‘buy-on-dips’ proposition, as is NZD which has broken above trend resistance.

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Published on  Tue, Nov 10 2009, 06:19 GMT

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