Macro Morning: Yawn

Politics and pronouncements were the key drivers in a macro sense overnight. In the US the House voted to suspend the debt ceiling for 3 months forestalling problems for the stock market and opening the way for the economy and earnings to continue to drive prices higher. David Cameron announced an “In or Out” referendum for Britain’s inclusion in the European Union.

The IMF was also out with its latest forecast for growth which it downgraded by 0.1% to 3.5% and 4.1% for 2013 and 2014 respectively. Europe continues to be the laggard with growth expected to fall 0.2% in 2013 from the previously expected 0.2% growth:

Downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States

Elsewhere the UK’s employment data was better than expected which helped European shares initially. The claimant count fell by 12,100 against expectations of no change with the unemployment rate falling to 7.7% from 7.8% expected. These numbers in the context of an economy the size of Britain are small change but to the extent that they were better than expected then we get a reaction.

Equally interesting was the release of CPI in Australia yesterday. There has been many column inches written already but the 0.2% quarterly rise in headline CPI were a good number for the economy and the RBA. It does not guarantee a rate cut, not even close, but what this and the 2.4% annual rate do is make inflation a non-issue should the RBA feel it needs to cut at some point this year. For mine they are unlikely to cut in February and we’ll have to see how things progress in the months ahead.

In the US, the data took a back seat to the earnings results that were released yesterday. Chip maker AMD didn’t lose as much as expected when it announced its earnings after the bell yesterday morning and was up 10% last night. Google shares were up 6.4% with strong profit and advertising revenue. Ibm was up 5% reporting its earnings in Q4 were up 6.3%.

So with 5 minutes to go before the end of trade the S&P is up  points or 0.1% to 1494. The tech news has driven the Nasdaq up 0.47% and the Dow is up 0.34%.

In Europe a bout of profit taking on bank and financial shares limited the markets move higher. Like the US however, some results of banner companies were not too bad with Unilever up 3.1% to a record high Reuters says after its results beat expectations. Novartis jumped 4.1% after its sales forecast.

In the end the FTSE was up 0.30% to 6198 to another multi-year high and the DAX rose 0.15%. The CAC however fell 0.40% with Milan and Madrid also lower falling 0.77% and 0.22% respectively.

In Asia yesterday the Nikkei lost 2.08% as investor fret over the Yen’s resurgence.  USDJPY looks like it is going to have a meaningful retracement which would bias the Nikkei lower as you can see by the relationship between the Nikkei and the USDJPY moves recently.

Elsewhere the Hang Seng fell 0.10%, Shanghai rose 0.25% and the Straits Times in Singapore rose 0.35%. The ASX was up 0.19% yesterday after the CPI and BHP’s results and should rise again today.

Lots of dancing on the spot in currency land over the past 24 hours. Euro stayed inside our box but traded a range of 1.3354 to 1.3263 but is closing roughly unchanged down 0.05% at 1.3312. It was a similar story with the GBP trading 1.5892 to 1.5800 but closing up just 0.03% at 1.5840. The Aussie Dollar is off 0.16% but up a little on the lows soon after the release of the CPI which was 1.0524. At present the Aussie is sitting at 1.0547

In commodities, crude was 1.23% lower overnight falling back to $95.49 Bbl. Gold was off a little pulling back 0.38% but silver continues to do its own thing rallying 0.82% to $32.21 oz. Copper fell 0.47% and you can see in the chart below that it is being wedged by a big old down trend line and a short term but not insignificant uptrend support – ceiling and floor as my 10 year old says.

copper, copper chart

The Ags were lower with wheat down 0.55%, corn off 1.06% and soybean down 1.02%. Sugar rallied a stellar 2.43%.

Lets have a look at some Meta 4 charts from my  AVATrade platform.

EUR/USD: 

The euro remains inside the box and it should be a good run when it eventually breaks out. The 1.3404 region is very difficult for the moment but equally 1.3255/60 is solid on the downside. We continue to think this is a small range to trade until it breaks.:

eur, eurusd, euro, euro (eur) price quote

AUD/USD:

The Aussie has its own trading range or box in our terms for the moment with the parameters of 1.0480 on the down side and  1.0580/1.06 on the topside. The catalysts for a break seem absent at the moment so like euro that forms the trading range but a break might reward for a run.:

aud, audusd, australian dollar, australian dollar price quote, audusd

Data

Nothing here in Australia of note today but we see Chinese, French, Spanish, German, Italian and European manufacturing PMI data tonight. In the US jobless claims and Marki PMI and then the EIA crude oil stocks report.

Twitter: Greg McKenna

Here is how the markets looked at 7.50 this morning.

Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility and you should consult your investment or financial adviser before making any investments.

Latest posts by Deus Forex Machina (see all)

Comments