Overnight Points of Interest

Posted by Graham Parlane on 13 November 2014

Ahead

# NZ Business Manufacturing index

# NZ Food Price Index

# Australian MI Inflation Expectations

#RBA Assist. Gov. Kent speaks

# China Industrial Production

# China Retail Sales

# China Fixed Asset Investment

# U.S. Weekly Unemployment Claims

# U.S. JOLTS Job Openings

Overnight

# European equities have fallen as global regulators fined 6 top European and US banks $US4.3 billion over alleged foreign exchange rigging. An escalation in the crisis in Ukraine which threatens to erupt into all-out war after two months of a fragile truce also weighed on Europe's main indices. The Stoxx600 fell 1.13% on the double whammy. The fines handed out to the 5 major banks also weighed on U.S. stocks as the financial sector led a mild move lower. The S&P500 is barely lower down, just 0.10%, with an hour to go. Elsewhere Japan’s Nikkei index hit fresh 7 year highs yesterday on speculation that the forecast rise in sales tax will be pushed back.

# Regulators fined 6 major banks including Citigroup and UBS a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation. HSBC, Royal Bank of Scotland ,JP Morgan and Bank of America also face penalties resulting from the inquiry that has put the largely unregulated $5 trillion-a-day market on a tighter leash. In the latest scandal to hit the financial services industry, dealers shared confidential information about client orders and coordinated trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings. Dozens of traders have been fired or suspended.

# A potential flare up in the simmering Ukraine conflict overnight with top Nato commanders noting Russian military equipment and Russian combat troops entering Ukraine this week. Heavy artillery fire rocked the east Ukrainian city of Donetsk, the industrial hub held by pro-Russian separatist rebels, on Wednesday morning. There were also reports of fighting near the rebel-held city of Luhansk, with one Ukrainian soldier killed and another injured, according to Ukrainian security forces. The United Nations Security Council is convening an emergency session on Wednesday to discuss the reported sightings.

#Whilst the EUR headed lower on the Ukraine situation the NZD and AUD pushed north, the NZD buoyed by the RBNZ’s fears of renewed house price gains on the back of record levels of immigration. Indeed the NZD was the best performing G-10 currency in the offshore session. GBP/USD fell sharply after the release of the Bank of England’s inflation report. The report noted UK CPI is “more likely than not” to fall below 1% over the next 6 months. The GBP move is to a new 2014 low.

# ECB’s Draghi reiterated that the ECB is committed to expand balance sheet and take further unconventional actions if inflation expectations worsen. Meanwhile US Treasury’s Lew said European authorities need to take resolute action to reduce risk of deeper slump in EZ, global economy can’t prosper by relying on US as importer of first & last resort.

# Saudi Arabia told OPEC that it kept crude production little changed in Oct from September.