Here we go.
The Aussie dollar and Aussie crosses are the big local story this morning after the currency made a fresh low for 2014 of 0.8511 as the chorus of calls grows for the Aussie to fall over the next year.
The catalyst last night was a speech by RBA Deputy Governor Low who took dead aim at the Aussie but it had already been under pressure in Asian trade yesterday hitting a low of 0.8570 before Lowe’s Epic Speech.
As iron crashed again overnight (-$1.46 to $68.17) and Lowe highlights the terms of trade fall and other, such as BoAML strategist David Woo talk about a slowing China the outlook for the Aussie has darkened materially.
My own view, stated here before, is that AUDUSD is on its way to 0.8350 or thereabouts. Next year, below 80 cents, or possibly well below.
Anyway to overnight trade and there was more ebullience from global stock traders, somewhat at odds with Macro traders of currencies and commodities.
US Markets are up but it seems struggling with the obvious impact of the increase in Q3 growth to 3.9% annualised (against 3.3% expected) and the more recent read that the consumer confidence index fell from 94.1 to 88.7.
- Dow Jones up 0.04% to 17,818 off the highs of the day
- Nasdaq up 0.89% to 4,755, strong all day
- S&P 500 up 0.27% to 2,069 for a new all-time closing high
European Markets – stocks rose again as anticipation of ECB action grow and German GDP dipped, as expected, in Q3 from 1.4% to a 1.2% year on year rate. Key here – and relevant to inflation and the ECB – is that the actualy quarterly rate was up only 0.1%.
- London(FTSE 100) up 0.02% to 6,731, miners were lower but balanced by the banks
- Frankfurt (DAX) up 0.77% to 9,861 on the ECB chatter
- Paris (CAC) up 0.31% to 82368. After an early spike drifted off into the close – AGAIN
- Milan (FTSEMIB) up 0.42% to 20,010, similar profile of trade to the CAC
- Madrid (IBEX) up 0.54%% to 10,700, stocks sold off toward the close but what about those SPanish 10 years, 1.92% – JOKING
Locally global positivity has seen the Dec SPI 200 contract rally 16 points in overnight trade which is a solid reversal off the lows of yesterday. Perhaps it will a positive day after yesterday’s weakness.
Yesterday in Asia Shanghai ripped higher once again no doubt on some foreign buying but also the hope, more likely expectation, of more easing. It seems its coming and 3,000 on the Shanghai composite within 12 months remains a reasonable target.
Here’s the Asian Scoreboard:
- Tokyo (Nikkei Average) up 0.29% to 17,408 – pre-election comments about growth and the Yen’s move weighed on sentiment a little
- Hong Kong (Hang Seng Index) down 0.21% to 23,844 – a messy down day
- Shanghai (Shanghai Composite Index) up 1.29% to 2,568 – huge move after lunch
On currencies as noted the Aussie was the big loser down 1.1% against a rise in the Canadian dollar of 0.19%. This screams Aussie specific selling and it lost ground against the Kiwi as well with AUDNZ down at 1.0916 – the lowest level since July this year.
Elsewhere the Yen was the other big mover with comments from BoJ Governor Kuroda who said that he “will carefully watch market moves, including FX, and their impact on economy,” knocking the wind from the US dollars sails a little. USDJPY is at 117.94 this morning while Euro is up as well after support at 1.24 was solid – it sits at 1.2474 while Sterling is at 1.5703.
Iron ore crashed as noted above and besides the fall in Dec 2014 the longer term futures are also crashing with Dec 2016 down $1.75 to $63.13 a tonne. Newcastle coal rose 30 cents a tonne for Dec delivery to $65.30 while Nymex crude tanked again, down 2.47% to $73.91 a barrel. Copper fell to $2.96 a pound and gold is at $1,196 an ounce. The Ags all rallied more than 1.5%.
On the data front today we get a partial indicator for next week’s GDP with the release of construction work done at 11.30 AEDT while tonight we get UK Q3 GDP and Durable goods in the US. There is also a raft of spending and home sales data in the US as well.
And here’s Ric Spooner from CMC Markets with the Stock to Watch
These are interesting times for gold miner, Newcrest. The stock was up 6.4% yesterday and the chart has returned to key levels.
Of historical interest in this chart is that Newcrest completed the classic AB=CD pattern when it rejected the low at $8.48. A nice outcome for pattern traders who spotted this and bought at the time.
Yesterday’s rally has seen Newcrest return to trend line resistance and the 200 day moving average. How it handles this might provide some insight into the level of intent behind the recent buying. The next chart resistance above these levels looks to be the July highs around $11.57.
Ric’s on Twitter: @ricspooner_CMC
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