The U$ is trading generally higher at the end of Tuesday trade and has now recovered a good deal of its Christmas selloff. Markets appear to be focusing on fundamentals and central bank expectations, with the Aud$ suffering a sharp move lower on the back of the bushfires, from which it has been suggested could result in a 0.3% reduction in the Q4 GDP. The Kiwi is suffering from its association with the Aud$, and both could be headed lower still as traders begin to position for an RBA rate cut in February. Elsewhere, the FX moves are less dramatic, with the US$ about 0.3% firmer against the other majors.
US stocks are slightly lower as Middle East tensions continue, while Gold remains firm as a safe haven asset. WTI is more or less unchanged from this time yesterday, currently at 62.60.
Wednesday will begin with a thin Asian session, with just the Australian Building Permits for November (exp 0.4%mm) to provide any direction. Europe will look to the German November Factory Orders (exp +0.1%mm, -5.5%yy) and the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, figures for December, while the US session will feature the ADP Jobs data (exp 150K), ahead of Friday’s NFP numbers, and the EIA Crude Oil Stocks Weekly Change, along with a speech from the Fed’s Brainard. Have a good day.
Economic data highlights will include:
Wed: Australian Building Permits, German Factory Orders, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US ADP Jobs data, EIA Crude Oil Stocks Weekly Change
Market moves, in brief:
FX: DXY 97.00 (+0.39%)
Bonds: US10Y; 1.827% (+0.65%), German 10Y; -0.283% (+0.81%), UK 10Y; +0.716% (+3.95%), Australian 10Y; 1.225% (+0.98%), NZ 10Y; 1.527% (-0.67 %), China 10Y; 3.165% (-0.54%)
Stock Indices: DJI; -0.37%, S+P; -0.24%, NASDAQ; +0.10%, EUStoxx50; -0.10%, FTSE100; -0.02%, Shanghai Composite; +0.69%,
Metals: Gold $1570 oz (+0.26%), Silver $18.35 oz (+1.10%), Copper $2.799 lb (+0.32%), Iron Ore $93.73 per tonne (NYMEX) (-0.13%),
Oil: WTI $62.62 pb (-0.29%)
|INDICES / COMMODITIES|
Sell AudUsd @0.6900. SL @ 0.6940, TP @ 0.6810
Based on the fact that the bushfires will be an ongoing problem, probably wiping several percentage points off the Q4 GDP result, which could result in a February RBA rate cut. I suspect the RBA will be forced to cut in February anyway, but this may be followed by further cuts down the track.