Currencies started the Asian session at similar levels to yesterday after the overnight gyrations and we held in relatively tight ranges.
On the data front, Australian consumer sentiment rose strongly in November, jumping 5.2 percent on-month (the first gain in 9 months) as the index hit its highest level since April 2011. The survey was conducted in the week November 5-11 as signs emerged that past RBA rate cuts were filtering through to the broader economy. Positive data since then, particularly in the housing sector, should ensure next month’s reading is equally positive.
Australian wage costs remained benign in the third quarter, rising 0.7 percent q/q, slightly below forecast and at a slower pace than Q2’s 1.0 percent. The RBA’s assertions in its recent quarterly review that wage pressures would ease modestly are being confirmed. In another small positive for the AUD, ratings agency Moody’s asserted that the high AUD is not a threat to the country’s sovereign rating as the country has strong finances and the agency expects China’s demand for Australian resources and commodities to continue.
In contrast, New Zealand had another wave of poor data hot on the heels of last week’s unemployment shocker. Retail spending unexpectedly contracted 0.4% q/q in the third quarter. The pullback was widespread across most sectors with fuel retailing seeing the largest decrease. Prior to the data, finance minister English cautioned that the country would see “patchy growth” for some time but still expected to return to a budget surplus by 2014/15. Furthermore, the NZD was higher than the government was comfortable with but doubted it could be forced lower by policy alone. The data seems to be doing that job for them.
The weakest German ZEW survey on current condition in 2-1/2 years was the catalyst that sent EUR down to fresh 2-month lows versus the US dollar as European trading got underway yesterday. The forward-looking economic sentiment surveys were also lower than expected and the EUR appeared to be heading one way. However, reports circulated of a bundled Greek aid payment in the pipeline (German and French finance ministers reportedly said an agreement is expected by November 20) and a sharp rebound ensued, bringing the pair back to 1.27.
US data releases were predominantly second-tier though did show that confidence among small businesses rose to a 5-month high in October with more companies predicting higher sales going forward. The NFIB’s optimism index increased 0.3 of a point to 93.1 with four of the measure’s 10 components contributing to the improvement. In contrast, a similar survey from IBD/TIPP declined 5.4 points to 48.6, the first decline in 3 months and the lowest reading since August.
Data Highlights
- US October NFIB Small Business Optimism out at 93.1 vs. 93.0 expected and 92.8 prior
- US November IBD/TIPP Economic Optimism out at 48.6 vs. 54.0 expected and 54.0 prior
- US October Monthly Budget out at -$120.0 bln vs. -$113.0 bln expected and -$98.5 bln prior
- NZ Q3 Retail Sales out at -0.4% q/q vs. +0.4% expected and +1.3% prior
- AU November Westpac Consumer Confidence out at +5.2% m/m vs. +1.0% prior
- AU Q3 Wage Cost Index out at +0.7% q/q, +3.7% y/y vs. 0.8%/3.8% expected and 1.0%/3.7% prior
- NZ October Non-resident Bond Holdings out at 62.4%, unchanged from prior
(All Times GMT)
- Sweden Unemployment Rate (0700)
- UK Unemployment Rate (0930)
- UK Jobless Claims Change (0930)
- UK ILO Unemployment Rate (0930)
- Swiss ZEW Survey (1000)
- EU Euro-zone Industrial Production (1000)
- UK BOE Inflation Report (1030)
- US MBA Mortgage Applications (1200)
- US PPI (1330)
- Us Advance Retail Sales (1330)
- US Business Inventories (1500)
- EU ECB’s Bini Smaghi to speak (1530)
- US FOMC Minutes (1900)