Good morning! Here’s the chatter.
- Another night of US dollar strength with the Euro, Pound and Aussie under pressure. The US dollar indeed closed the week breaking back up through the weak period that has persisted since July. The key driver has been data in the EU which has reinforced the ECB needs to do something about disinflation which is accelerating and record unemployment which continues to persist – the Euro’s week was a poor one and it closed at 1.3465, Sterling closed at 1.5924 and the Aussie dollar closed at 0.9435 – not far off my target of 0.94 and the guys from Iquant Systems target of 0.9330.
- The reason the USD move is so important is that a weaker USD has been synonymous with Taper on, Taper off and if the US dollar is breaking higher then it suggests that the Fed might have hit the mark with the slightly more aggressive language reflecting the moves last week about the chances of Taper sooner rather than later might have just done enough to increase uncertainty in the mark and end the one way bet that was the the stock market rally and the US dollar fall. European data helped but its the FOMC that took the foot off the US dollar. USDJPY finished the week at 98.67.
- On stock markets it was a positive day with the Dow, Nasdaq and S&P 500 all closing higher. The increases were 0.45%, 0.06% and 0.3%1 respectively. The S&P made a high of 1775 this week which was just above the top of a big weekly uptrend that came in at 1769 – the weeklies look like they are running into resistance but the dailies have turned according to some technicians – non-farm payrolls on Friday are very important in this context.
- Across the Atlantic only the FTSE managed to have a positive return on the day rising 0.05% but the rest of Europe, no doubt worried by the early US fall, finished lower. The DAX fell 0.29%, the CAC was 0.69% lower while in Milan and Madrid were 0.97% and 0.71% respectively.
- On the Sydney Futures Exchange the SPI 200 rose 24 points to 5412 bid. On the bond boards the 3′s and 10′s were 6 and 5.5 points lower reflecting the move higher in US Treasuries which closed the week at 2.62% up 7 points on the day on Friday.
- Looking at commodity markets Light Sweet Crude was lower by 1.84% closing at $94.60. Gold dropped again and closed at $1,311 oz down about $40 over the week. Silver was largely unchanged, Copper closed at $3.29 lb while on the Ag’s soybeans fell 1.11% but corn and wheat were fairly boring by their standards down 0.29% and up 0.04% respectively. Bitcoin opens the week at 213.
On the data front looking back to Friday and we see a decent run of Australian and Asian PMIs which is great news for the globe and Korean exports surging 7.3%.
Today it’s a holiday in Japan but in Australia we get the early month data that is so important for the RBA. TD inflation kicks off the program then ANZ Job Ads, house prices and retail sales in Europe it is Markit PMI day along with ISM in New York and factory orders.
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