19 August 2014
# NZ Producer Prices
# Australian RBA Monetary Policy Meeting Minutes
# NZ RBNZ Inflation Expectations
# UK Inflation
# U.S. Building Permits
# U.S. Inflation
# U.S. Housing Starts
# European stocks surged higher on what was apparently relief at easing tensions in the Ukraine as foreign ministers from Germany, Russia, Ukraine and France gathered for a meeting billed as a precursor to cease-fire talks. The sharp move higher, was however, made on relatively light volumes. By session end the Stoxx was up a healthy 1.18%. A similar story for the S&P500 which rose 0.85%.
# The NAHB housing market index rose to a 7 month high in August coming in at 55.0 versus expectations of 53.00 which was also the previous result. The improved reading was the 3rd straight month of gains. Commenting on the release NAHB Chief Economist David Crowe said, "Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand."
# Ratings agency Moody’s said it viewed France’s missing of its 2014 deficit target as credit negative for both France and the Eurozone . Moody’s has an Aa1 rating for the sovereign’s debt, and already has it on negative watch. Moody's said France's growth and deficit problems "illustrate the continuing challenges facing the euro area and will further test the monetary union's political will to enforce fiscal discipline in a challenging economic environment. Last week Finance Minister Michel Sapin said that GDP growth this year would be around 0.5%, well short of the government's 1.0% forecast, and that the government would miss its 3.8% deficit target this year. French GDP showed zero growth in the second quarter, as in the first quarter. No surprise here if you’ve been following our OPI’s.
# The USD was moderately stronger buoyed by the sturdier housing data. Along with U.S. yields the dollar pushed higher sending the EUR/USD down to 1.3360 from 1.34 and the USD/JPY up to 102.55 from 102.25. The NZD and AUD failed to benefit but a ‘steady as she goes’ RBA minutes today may see the AUD regain some lost ground. As with equities, the volumes throughout markets was rather light as the highly awaited Jackson Hole draws nearer.
# The crude oil complex dropped on the seeming easing in geopolitical tensions with Brent slumping to its lowest level in 14 months whilst WTI gave back a fair amount of Fridays sharp rally, dropping 1.0% to US$96.40.
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