Thursday. You know how this goes:
The Aussie dollar fell heavily overnight hitting a low of 0.8477 in what might be the end of the run for the moment, within the longer term downtrend, given the solid bounce which sees it back at 0.8543 this morning after US dollar weakness overnight.
What was strange about the Aussie’s price action is in context with what was happening elsewhere – and suggests the fall was a position clear-out – is that the selling came after a solid surge into the close on Chinese stock markets in Hong Kong and Shanghai, both of which gained more than 1% into the close.
More likely traders and money managers are finally in the process of re-rating Australia. Another investment bank put out a warning last night about China and Europe which is in effect a warning on Australia as well.
It doesn’t mean the Aussie’s fall will be linear, or a crash, but a re-rating is good news because as the Aussie slips, so workers and business become more competitive on a global basis.
As the RBA keeps saying.
Turning to other action overnight and the data in the US was on the disappointing side which hurt the dollar, and helped the Aussie.
Durable goods came in solid at +0.4% but ex-transportation the print was -0.9% against expectations of a 0.5% rise. Personal income rose 0.2%, just half of the expected 0.4% rise which saw spending print 0.2% against the expected 0.3%. The Chicago PMI missed as well printing 60.8 from 66.2 last and 63 expected. On the good news front consumer confidence rose to 88.8 – a seven year high
In the end though, with 10 minutes to go before the closeUS Markets are quiet with a slight bid bias in quiet trade before the Thanksgiving holiday tonight.
- Dow Jones up 0.04% to 17,822, rallying into the close
- Nasdaq up 0.56% to 4,785, strong all day
- S&P 500 up 0.24% to 2,072 for a new all-time closing high
On European Markets – the DAX was stronger once again and is up something like 16% since last months low. It’s just 84 points shy of the magical 10,000 mark – the power of QE writ large. The rest of the region ended down.
- London(FTSE 100) down 0.03% to 6,729, after opening stronger but drifting off all day
- Frankfurt (DAX) up 0.56% to 9,916 an up down up day
- Paris (CAC) down 0.21% to 4373. Third day in a row gains couldn’t be held
- Milan (FTSEMIB) down 0.36% to 19,938, slipped all day
- Madrid (IBEX) down 0.49% to 10,647, down all day and bond traders woke up and sold Spanish 10’s. But 1.97% seriously?
Futures trade overnight on the ASX suggest the local market will open flat to down with Dec SPI 200 contract off 3 points to 5,403. But the context is of course yesterday’s solid 1.1% rise.
On Asian Markets yesterday China ripped higher as hopes that the stimulus will add to growth in 2015. Technically though as I’ve been writing recently Shanghai 3000 looks a really chance as each new high begets more buying.
- Tokyo (Nikkei Average) down 0.14% to 17,384 – fought back after an ugly started but dipped into the close
- Hong Kong (Hang Seng Index) up 1.12% to 24,112 – huge rally into the close
- Shanghai (Shanghai Composite Index) up 1.42% to 2,604 – for the second day in a row we had a huge move after lunch. Buying from Europe
On bond markets US 10’s closed down 2 points after the data at 2.24%, in Germany rates finsihed at 0.7% while in the UK 10’s closed at 1.98%.
Turning to currencies and besides the Aussie’s fall and bounce the USD was on the weaker side with Euro up at 1.2512, Sterling up at 1.5797 after the Q3 GDP data last night confirmed the 3% growth rate. The Yen is becalmed at 117.72, so far lagging the Euro but for how long?
On commodity markets crude was a little lower down 0.53% to $73.70 a barrel after the Saudi Oil Minister said that there was no need for a production cut and prices would stabilise. Gold is stuck at $1,196 an ounce, copper slipped marginally to 2.9555 a pound. Iron ore was fairly quiet during our day yesterday but ended up 24 cents a tonne for Dec delivery at $68.41 a tonne. Newcastle coal dipped 10 cents to $65.20. Corn rose 1.1%, whaet was 0.94% and soybeans rose 0.4%.
On the data front today we get HIA home sales and another partial for next week’s GDP with the release of Private New Capital Expenditure. Unemployment in Germany is out along with CPI and a raft of EU data. It’s a holiday in the US.