Asia kept risk and related currencies at their post-FOMC highs in the early stages of the day as a Tokyo holiday reduced both liquidity and activity.
However, the rally did run in to some difficulties mid-morning as newswires reported that US President Obama, who is campaigning in Ohio with a reliance on the auto industry, would launch a trade complaint against China at the WTO over unfair subsidies for its auto and auto parts industries. This knocked the Shanghai Composite lower (the only regional index in the red by lunch) and knocked a few points off AUDUSD.
A quiet data day saw Singapore exports fall more than expected in August as electronics shipments tumbled and the Euro-zone crisis crimped demand. Non-oil domestic exports fell a seasonally-adjusted 9.1 percent on-month and from a year earlier were down 10.6 percent. Electronics shipments were down 11.0 percent on-year.
In other data, UK’s Rightmove house prices fell for the third straight month in September with Rightmove suggesting that the Olympics was still having a distracting effect. Prices fell 0.6 percent m/m resulting in a slower annual gain of 0.7 percent compared with August’s 2.0 percent gain
Friday’s markets were enthusiastic about the announcement of the Fed’s third wave of quantitative easing late Thursday with another surge in risk appetite, benefitting risk currencies and sending the USD index down to its lowest level since the start of May (coincidentally the slide stopped at exactly the same level as May 1, 78.60. With all the positive vibes from the ECB meeting as well, rumours of an imminent Spanish downgrade by Moody’s did little to dent the EURUSD’s 1-1/2 big figure rally. Sweden’s Q2 GDP numbers suffered hefty downward revisions helping to boost EURSEK to 1-month highs.
On the US data front, outcomes were mixed. Headline retail sales rose a solid 0.9 percent m/m in August, though downward revisions to July’s numbers took out some of the sting. Sales ex-food/gas were a less-impressive +0.1 percent m/m. CPI was in line with forecasts at +0.6 percent m/m, +1.7 percent y/y though core CPI lagged with +0.1 percent m/m and +1.9 percent y/y.
Industrial production fell 1.2 percent from a month ago while capacity utilization dipped to 78.2 percent from 79.2 percent, its lowest since January. The preliminary Michigan confidence index rose strongly to 79.2 from 74.3, close to the recent high in May and lastly, business inventories rose by the most in 6 months suggesting there is still some pent-up demand to be filled. Wall St looked to the positives with the DJIA rising 0.4 percent, S&P +0.4 percent and the Nasdaq +0.89 percent.
Data Highlights
- US Aug. CPI out at +0.6% m/m, +1.7% y/y, both as expected vs. flat/1.4% prior resp.
- US Aug. Advance Retail Sales out at +0.9% m/m vs. 0.8% expected and revised +0.6% prior
- US Aug. Retail Sales Ex-Autos/Gas out at +0.1% m/m vs. 0.4% expected and revised 0.8% prior
- US Aug. Industrial Production out at -1.2% m/m vs. flat expected and revised 0.5% prior
- US Aug. Capacity Utilization out at 78.2% vs. 79.2% expected and revised 79.2% prior
- US Sep. Prelim. Michigan Confidence out at 79.2 vs. 74.0 expected and 74.3 prior
- US Jul. Business Inventories out at +0.8% m/m vs. 0.4% expected and 0.1% prior
- NZ Q3 Westpac Consumer Confidence out at 102.5 vs. 99.9 prior
- NZ Aug. Performance of Services Index out at 50.0 vs. revised 52.4 prior
- UK Sep. Rightmove House Prices out at -0.6%m/m, +0.7% y/y vs. -2.4%/+2.0% prior resp.
- SI Aug. Non-oil Domestic Exports out at -9.1% m/m, -10.6% y/y vs. -0.7%/-4.0% expected and -3.6%/+5.7% prior resp.
- AU Aug. New Vehicle Sales out at +3.6% m/m, +6.4% y/y vs. revised -1.1%/+5.1% prior resp.
(All Times GMT)
- EU Euro-zone c/a Balance (0800)
- Norway Trade Balance (0800)
- EU Euro-zone Trade Balance (0900)
- CA Int’l Securities Transactions (1230)
- US Empire Manufacturing (1230)
- CA Existing Home Sales (1300)