News and views
Equity markets in the northern hemisphere took a breather yesterday. The S&P500 is little changed at +0.2%, having barely moved throughout the session. Some media debate around the likelihood of an extension to the US first home buyers’ tax credit scheme dented property and building firms, but otherwise there was little noteworthy news. Oil posted a decent loss of 2.5%, inventory-attributed, but metals were subdued, copper -0.5% and gold unchanged after initially making a fresh alltime high of $1048. US 10yr notes gained by 8bp, the 10yr auction well bid to 2bp lower than expectations. US money market fund assets dipped by $17.4 billion to $3.4 trillion last week, further evidence of money leaving the sidelines for riskier equity and credit assets.
The US dollar is holding above the key 75.83 for now – it dipped after Sydney closed to 76.13, but then bounced to around 76.50. EUR reversed the previous day’s gains, down to 1.4650. USD/JPY was whippy, making a recent low at 88.00 before spiking to 89.40 and resting at 88.60.
AUD made a small push higher to a fresh 2009 high of 0.8951, but didn’t hold that long, back to its Sydney close of 0.8890.
NZD reached 0.7398 and quickly sank back to 0.7320. AUD/NZD held previous gains between 1.2100 and 1.2150.
US consumer credit sank -$11.9 bln in August, below expectations of -$9.0 bln but above the previous month’s -$18.9 bln.
Euroland GDP growth revised down from –0.1% to –0.2% in Q2, due to lower estimates for both household and investment spending.
German factory orders up 1.4% in Aug. That is the sixth consecutive monthly gain in orders, providing further confirmation that the global trade slump in Q4 last year and Q1 this year has now given way to a resumption of activity.
UK consumer confidence rises from 65 to 71 in Sep, according to Nationwide. This mirrors the rise in the GfK confidence index, reported last week. In other news, the British retail consortium reported a –0.1% yr fall in its Sep shop prices index (unchanged from Aug), a precursor to next week’s official CPI data.
Outlook today
AUD/USD and NZD/USD outlook today: These currencies should be supported today by the 0.8850-70 and 0.7300-20 areas, respectively. Unless these supports give way, the upward trend is intact. The 0.7400- 0.7500 target area for NZD should prove sticky. Today’s main data event will be the Australian employment report, which we expect to show the unemployment rate nudging only slightly higher.
