Market sentiment reacts favourably to this possibility highlighted in the FT
After a quick dip to just below 1.35 in late Asia/early European trading yesterday, EURUSD was able to garner some support and a mild rebound as the flow of negative headlines seemed to ebb. Markets appeared to approve of the latest heightened austerity measures from Greece while an announcement that they had enough cash until mid-October and had been less reliant on ECB funding in July also helped sentiment. Meanwhile German finance minister Schaeuble commented that it was not possible for Greece to exit the EUR. Yet it was an FT headline that Italy had been in talks with China for them to buy bonds and invest in strategic companies (note similar stories have appeared in the past re Greece, Portugal and Spain) that cemented a more positive risk appetite.
There was no US data to influence markets and Wall St was able to bounce back late in the session on the lack of additional negative news (no news is good news!). The DJIA rallied 0.63%, S&P 0.7% and the Nasdaq 1.1% (first positives in three days) and the slightly better feel for risk saw the USD retreat a tad in the closing stages thus enabling risk currencies to stage a mild comeback. On the US economic front, Fed’s Fisher said he would likely not support further easing (he is a known dissenter) but acknowledged that recent data was discouraging and the US consumer was in a “defensive crouch”. Meanwhile US-based NABE slashed its 2011 and 2012 GDP forecasts to 1.7% and 2.3% from 2.8% and 3.2% respectively.
The Asian session was again affected by regional holidays and ranges were less dramatic than yesterday. On the data front, New Zealand housing market showed a mild bounce (+0.5%) in August after July’s -0.6% m/m decline. Tight supply and higher turnover volumes were responsible for the rebound, according to the REINZ. While on things New Zealand, finance minister English commented that New Zealand should be able to keep rates lower for longer and, combined with RBNZ governor Bollard’s comments late yesterday that the high NZD would remain “quite a brake” on NZ exports and that the country would be better off if the currency reflected fundamentals, the NZD saw a brief bout of weakness.
In Australia, business confidence, as measured by the NAB survey, deteriorated sharply in August as particularly volatile financial markets took their toll on sentiment. The business confidence survey slumped to a 2-year low of -8 from +2 last while business conditions fared just a touch better but still showed deterioration to -3 from -1. The two-tiered nature of the economy was once again highlighted in the survey with the high AUD also said to be undermining competitiveness.
Looking ahead, Europe has Swedish CPI and unemployment on tap along with UK trade data and CPI/RPI numbers along with a speech from BOE’s Posen. Watch out also for the meeting between Germany’s Merkel and Finnish PM Katainen and a speech from finance minister Schaeuble. The North American session kicks off with US small business optimism, import prices and finishes with IBD/TIPP economic optimism.
Economic Data Highlights
After a quick dip to just below 1.35 in late Asia/early European trading yesterday, EURUSD was able to garner some support and a mild rebound as the flow of negative headlines seemed to ebb. Markets appeared to approve of the latest heightened austerity measures from Greece while an announcement that they had enough cash until mid-October and had been less reliant on ECB funding in July also helped sentiment. Meanwhile German finance minister Schaeuble commented that it was not possible for Greece to exit the EUR. Yet it was an FT headline that Italy had been in talks with China for them to buy bonds and invest in strategic companies (note similar stories have appeared in the past re Greece, Portugal and Spain) that cemented a more positive risk appetite.
There was no US data to influence markets and Wall St was able to bounce back late in the session on the lack of additional negative news (no news is good news!). The DJIA rallied 0.63%, S&P 0.7% and the Nasdaq 1.1% (first positives in three days) and the slightly better feel for risk saw the USD retreat a tad in the closing stages thus enabling risk currencies to stage a mild comeback. On the US economic front, Fed’s Fisher said he would likely not support further easing (he is a known dissenter) but acknowledged that recent data was discouraging and the US consumer was in a “defensive crouch”. Meanwhile US-based NABE slashed its 2011 and 2012 GDP forecasts to 1.7% and 2.3% from 2.8% and 3.2% respectively.
The Asian session was again affected by regional holidays and ranges were less dramatic than yesterday. On the data front, New Zealand housing market showed a mild bounce (+0.5%) in August after July’s -0.6% m/m decline. Tight supply and higher turnover volumes were responsible for the rebound, according to the REINZ. While on things New Zealand, finance minister English commented that New Zealand should be able to keep rates lower for longer and, combined with RBNZ governor Bollard’s comments late yesterday that the high NZD would remain “quite a brake” on NZ exports and that the country would be better off if the currency reflected fundamentals, the NZD saw a brief bout of weakness.
In Australia, business confidence, as measured by the NAB survey, deteriorated sharply in August as particularly volatile financial markets took their toll on sentiment. The business confidence survey slumped to a 2-year low of -8 from +2 last while business conditions fared just a touch better but still showed deterioration to -3 from -1. The two-tiered nature of the economy was once again highlighted in the survey with the high AUD also said to be undermining competitiveness.
Looking ahead, Europe has Swedish CPI and unemployment on tap along with UK trade data and CPI/RPI numbers along with a speech from BOE’s Posen. Watch out also for the meeting between Germany’s Merkel and Finnish PM Katainen and a speech from finance minister Schaeuble. The North American session kicks off with US small business optimism, import prices and finishes with IBD/TIPP economic optimism.
Economic Data Highlights
- NZ Aug. Food Prices out at -1.3% m/m vs. +2.0% prior
- NZ Q2 Manufacturing Activity out at +2.1% q/q vs. revised 2.7% prior
- UK Aug. RICS House Price Balance out at -23%, as expected, vs. -22% prior
- NZ Aug. REINZ House Price Index out at +0.5% m/m vs. -0.6% prior
- AU Aug. NAB Business Confidence out at -8 vs. +2 prior
- AU Aug. NAB Business Conditions out at -3 vs. -1 prior
Upcoming Economic Calendar Highlights
(All Times GMT)
(All Times GMT)
- Sweden CPI (0730)
- Sweden Unemployment Rate (0800)
- UK Trade Balance (0830)
- UK DCLG House Prices (0830)
- UK CPI/RPI (0830)
- UK BOE’s Posen to speak (1100)
- US NFIB Small Business Optimism (1130)
- US Import Price Index (1230)
- US IBD/TIPP Economic Optimism (1400)
- EU ECB’s Weidmann to speak (1530)
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