The EUR started today’s Asian session on a weak note amid reports of violent protests in Spain against the government’s 2013 austerity measures while the IMF warned the Greece may face a funds shortfall on delays in privatization plans and slower revenue collection.
It was generally a risk-off day in Asia with equity markets reflecting the weak performance on Wall Street yesterday. AUD was a small out-performer as gold prices stabilized and recovered with AUDUSD managing to hold above the 200-day moving average (currently 1.0339)
New Zealand’s trade data for August was a mild disappointment with the deficit widening to NZ$866 mln, its highest since October 2008 and wiping out the last 6 months of surpluses in one swipe, as exports slumped to a 19-month low with slower dairy exports the main culprit. The year-to-date numbers were just as disappointing and, with a deficit of NZ$866 mln it is the worst performance since end-2009. Coincidentally, dairy cooperative Fonterra moved to slash its final 2011/2012 payout by 19 percent. The NZD was little changed on the report but did trade with a heavy bias throughout the session.
Late in the US session Fed’s Plosser poured cold water on any post-QE3 fires that might have still been burning when he expressed severe doubts that QE3 would boost growth and/or hiring, believing instead that it may jeopardize credibility. He opined that it was not appropriate in the current environment with risks outweighing the potential meager benefits.
The EUR started the overnight session on a weak footing after the Greek PM warned that Greece might need to raise more funds from debt markets than originally thought in 2015/16. Add to this the apparent fallout between Merkel and Hollande and EURUSD slid below the 1.29 mark, but only briefly. Rumours of a think-tank report on ECB bond buying and better US data (see below) dragged the pair to the day’s highs, but again only fleetingly before we saw the pair reverting to mid-range.
US data was more risk-friendly with US consumer confidence rebounding to 70.3 from 61.3, a 7-month high with labour sentiment up sharply. The Richmond Fed manufacturing index also surged to +4 from -9, back to the highs seen in May, as both shipments and new orders rebounded. In this case, however, the employment component remained steady. US house prices consolidated with 0.2 percent m/m gains while the S&P/CaseShiller equivalent also steadied to the positive side with 0.44 percent m/m gains.
Data Highlights
- CA Jul. Retail Sales out at +0.7% m/m vs. +0.2% expected and revised -0.3% prior
- US Jul. S&P/CaseShiller House Prices out at +0.44% m/m vs. 0.8% expected and revised 0.91% prior
- US Sep. Consumer Confidence out at 70.3 vs. 63.1 expected and revised 61.3 prior
- US Sep. Richmond Fed Manufacturing Index out at +4 vs. -5 expected and -9 prior
- US Jul. House Price Index out at +0.2% m/m vs. 0.6% expected and revised 0.6% prior
- NZ Aug. Trade Balance out at –NZ$789 mln vs. –NZ$630 mln expected and revised +NZ$97 mln prior
- AU Aug. DEWR Internet Skilled Vacancies out at -2.9% m/m vs. revised -2.8% prior
(All Times GMT)
- SI Industrial Production (0500)
- Sweden Confidence Surveys (0715)
- Sweden Trade Balance (0730)
- Norway Unemployment Rate (0800)
- UK CBI Reported Sales (1000)
- US MBA Mortgage Applications (1100)
- GE CPI (1200)
- GE Bundesbank’s Weidmann to speak (1400)
- US New Home Sales (1400)
- US Fed’s Evans to speak (1715)