12 September 2014
Good Friday morning
# NZ Manufacturing Index
# NZ Food Price Index
# BOJ Gov. Kuroda speaks
# U.S. Retail Sales
# University of Michigan Consumer Confidence
# China Industrial Production
# China Retail Sales
# China Fixed Asset Investment
# European stocks declined towards one week lows in a generally quiet session. Some pointed to China’s easier inflation figure yesterday as somewhat concerning regarding China’s growth. Mining shares took a hit on that basis, the Stoxx600 ending down a modest 0.12%. In stateside trading early losses on an unexpected jump in U.S. weekly jobless claims were reversed over the course of the session. The bounce back came at the hands of the energy sector, the S&P energy index rising 0.1%, after trading down more than 1%. By the end of trade the S&P500 was up 0.09% whilst the Dow lost 0.12%.
# U.S. weekly jobless claims edged higher after what has been a wonderful run recently. Claims had spent some weeks under 300K, levels consistent with pre GFC America, however the series saw a jump in those filing for unemployment benefits by 11k to 315K. The four-week average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, edged up 750 to 304,000, not far from pre-recession levels and still consistent with strengthening labour market conditions.
# UK PM Cameron said he spoke with European leaders and they have agreed to push ahead with sanction of Russia. Indeed the U.S. and EU are said to be close to imposing the toughest round of energy sanctions yet, which would hit both Russia's energy other state-controlled companies. The sanctions reportedly would ban U.S. and European companies from working with Russia on future oil exploration in the Russian Arctic, deep seas and shale rock formations.
# The grind higher continued for the USD, the broad dollar index gaining another 0.2%. The USD Index has now been up 9 weeks straight! USD/JPY rose to new 6 year highs after BOJ Gov. Kuroda reaffirmed his pledge to do whatever it takes to get Japanese inflation to 2.0%. Once again however it was the AUD that was the real focus. The unbelievable Australian jobs data released yesterday failed to put an enduring bid under the AUD/USD with the market taking the stance that the incredible data simply doesn’t pass the ‘sniff’ test. What a week it has been for the AUD. After falling 3 cents from Fridays 0.94 high to 0.91 the Aussie flew above 0.9200 on the release only for the unit to give up all those gains, and more, by the end of the New York session, now languishing below 0.9100. Somewhat counter intuitively the NZD rose against the AUD giving credence to our recommendation of Wednesday.
# The latest YouGov poll, the same that sent GBP sharply lower Monday, has swung back in favour of the ‘No’ vote for Scottish independence this morning showing 52% favour staying in the UK. The GBP has risen sharply.
# The U.S. 10 year bond yield inched higher to 2.55%, the highest in 5 weeks.
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