There was not much on the data front so all eyes were glued to US election screens during the Asian session.
As the first results filtered through, currency markets reacted accordingly but the broader theme was a weaker US dollar as predictions/exit polls suggested we were closer to an Obama victory than a Romney one. By lunchtime, US 30-year Treasurys had rallied one full point to trade at a yield of 2.87 percent. Once again we were left waiting for the results from the swing states, notably Florida, Ohio, North Carolina and Virginia. The Senate race looks as if it will yield a similar make-up as we have now – not good for risk and we have seen S&P futures lower on the session.
Of the data releases, Australia’s construction industry was marginally healthier in October with the PMI improving to 35.8 from 30.9, an 11-month low. However, the index has spent the last 2-1/2 years blow the key 50 threshold! The data had zero impact on the AUD which was still finding support after yesterday’s no-change decision from the RBA.
UK shop price inflation ticked higher in October, according to data from the British Retail Consortium. The shop price index rose 1.5 percent y/y following a 1.0 percent increase the previous month with food prices accounting for most of the increase. Food prices rose 4.0 percent from a year ago having risen 3.1 percent in September though part of this pressure was eased by heavy discounting by clothing and electrical retailers. GBPUSD underperformed versus the other USD crosses on the day.
EU Juncker was also on the wires fighting the eurozone’s corner. He claimed that Europe’s fundamentals were better than the US and Japan with the US fiscal cliff an event that could deflect some attention away from Europe. He noted that Greece had no real alternative to austerity and expected a “yes” vote at today’s parliament vote.
Once again weak eurozone economic data set the EUR off on a downward path early in yesterday’s European session – softer service sector PMIs and weak German factory orders being the main culprits - while concerns ahead of the Greek parliamentary vote on austerity measures also lent a hand. However, 1.2750 held the slide and we were soon recovered back to the 1.28 handle. UK data continues to be weak with industrial production numbers disappointing and this kept GBP capped while AUD extended its firmer tone after the unchanged RBA.
The US reported a slowdown in job openings in September with JOLTs openings falling to 3561 from an upwardly-revised 3661. The ISM New York reading was a disappointing 45.9. Towards the close of the US session, exit polls began to suggest an Obama win, albeit a narrow one. Risk appetite ticked higher and the USD slid marginally versus the index as Wall Street rebounded and US Treasuries faltered. This same theme played out in the Asian session as mentioned above.
Data Highlights
- US October ISM New York out at 45.9 vs. 52.9 prior
- CA October Ivey PMI out at 58.3 vs. 58.2 expected and 60.4 prior
- US September JOLTs Job Openings out at 3561 vs. 3653 expected and revised 3661 prior
- UK October NIESR GDP Estimate out at +0.5% q/q vs. revised +1.0% prior
- AU October AiG Performance of Construction out at 35.8 vs. 30.9 prior
- UK October BRC Shop Price Index out at +1.5% y/y vs. +1.0% prior
(All Times GMT)
- Swiss CPI (0815)
- Sweden Riksbank Minutes (0830)
- Sweden Budget Balance (0830)
- Norway Industrial Production (0900)
- UK BOE’s Haldane to testify at UK Banking Panel (0930)
- EU Euro-zone Retail Sales (1000)
- GE Industrial Production (1100)
- US MBA Mortgage Applications (1200)
- EU ECB’s Draghi to speak (1210)