25 January 2013

Posted by Graham Parlane on 25 January 2013

Good morning

Overnight

# The gentle grind higher in equities continues with the EuroStoxx600 ending up +0.23% while the S&P500 is broadly unchanged at +0.11%

# The NZ and Australian dollars surprisingly weakened overnight despite a raft of supportive factors. Yesterday's healthy NZ manufacturing data, a buoyant China flash PMI, a stronger EUR and GBP all failed to support the antipodeans as they slid back into now very familiar ranges. From a high of 0.8447 the Kiwi has been as low as 0.8374.

# The currency story of the last 24 hours has been the re-emergence of the JPY weakening trend. After a classic 'buy the rumour, sell the fact' response to the BOJ meeting, JPY weakness soon returned. Government minister Nishimura said USD/JPY at 100 would be no problem, though it would add to import costs. He also said the Bank of Japan needs to ease more to reach its 2% inflation target. The USD/JPY strengthened from 88.50 to 90.00.

# Gold fell more than 1% after repeatedly failing to break above a key technical resistance around $1,700. Gold had failed to breach that level in the last five sessions in a row. Investor confidence in gold was eroded when major bullion bank HSBC said in a note that it had halved its exposure to gold, shifting its inflation hedge to U.S. Treasury Inflation-Protected Securities (TIPS).

# Whilst remaining firmly in contraction territory, the January European composite manufacturing PMI inched up to 48.2 from 47.2 previously.

# Conversely, the U.S. flash manufacturing PMI rose to a 22 month high of 56.1 from 54.0 previously, suggesting the strongest rate of growth since March 2011. Output, new orders and employment each accelerated and stayed above the 50 level indicating solid growth.

# U.S weekly jobless claims dropped to 5 year lows as the number of weekly unemployment benefit applications dropped 5,000 to a seasonally adjusted 330,000. That's the fewest since January 2008. Perhaps the FED will get their 6.5% unemployment rate far sooner than most expect?

# Apple Inc. suffered the biggest share-price decline in its history following a mixed earnings report yesterday. Apple stock was down 12% at $452.46 after trading above $700.00 only as recently as late September. Clearly making US$13 bio in a quarter is not good enough ! (it did take them almost twice as many unit sales to achieve a similar profit to the previous quarter). Apple sells 10 units of various product every second globally.

Ahead

# Japan CPI (a bigger deal these days given the newly embraced +2.0% target)

# Japan Monetary Policy Meeting Minutes

# UK Preliminary GDP

# U.S New Home Sales

Regards and have a good weekend.

G.

BBY (NZ) Limited, a specialist advisor in Futures - FX - CFD - Options - Shares - Gold - Silver - Commodities

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