To the scoreboard:
Dow: 20,980 -2 (-0.01%)
S&P 500: 2,401 -1 (-0.07%)
AUD/USD: 0.7429 +0.0003 (+0.04%)
ASX200 SPI futures (June contracts – 20 minute delay): 5,855 +1
Iron ore benchmark 62% fines: $US61.17 +$US0.37 (+0.6%)
1. US dollar continues its slide: The US dollar index fell by another 0.71% overnight, with the sharpest moves in the Euro ($US1.1086) and Swiss franc (US98.53 cents). It continues the trend this week of capital moving out of US assets, with mixed data and more drama in Washington. On the data front, US housing construction starts disappointed, but industrial production beat forecasts.
2. Data today: Australia has the March wage price index at 11:30am AEST, with forecast growth of 1.9%. It’s sure to get plenty of attention, and Business Insider has a handy 10-second primer. There’s also the Westpac consumer confidence index, following on from yesterday’s poor ANZ reading. Tonight the US has weekly EIA oil inventory data.
3. Australia today: SPI futures traders have the local market little changed, and key data releases today are likely to drive capital flows for the ASX200 and particularly the Aussie dollar. The AUD has crept further above US74 cents as part of the global USD sell-off. It wasn’t spared against the Euro though, with AUD/EUR falling to its lowest level since September last year.
Iron ore spot prices held again last night in the low-$60 a tonne range, but iron ore futures shot higher in the overnight session. That’s despite what looks to be a worrying build-up in iron ore port inventories in China:
4. China poses the biggest threat to markets: This Bank of America Merril Lynch survey of 213 money managers reveals that their main concern is the risks posed to the global economy from China’s crackdown on risky lending practices. That crackdown has involved raising the inter-bank lending rate and increasing bank disclosure requirements.
Perhaps in an effort to alleviate the market’s concern, China’s central bank pumped in $US24.7 billion yesterday to increase liquidity, it’s biggest one-day injection in four months.
5. Goldman Sachs not as confident on a Fed rate rise: Goldman’s chief economist Jan Hatzius has become more skeptical about the US Federal Reserve’s current forecast of two more interest rate rises in 2017. On the back of a weak run of data that’s raised doubts about the pace of US inflation, Hatzius and his team have reduced the likelihood of a June rate rise to 80% from 90%.
6. The evolution of trading: This series of charts from the Financial Times shows the shifting patterns of trading strategies over time. It ranges from the rise of simple passive investment vehicles to advanced high-speed financial algorithms. It’s interesting to note how the new techniques have changed global capital flows and investor behaviour.