US corporate earnings remained a point of contention overnight as expectations build third-quarter earnings will show a material decline from the second-quarter. Overnight, oil heavyweight Chevron issued a profit warning showing earnings would be “substantially lower” than the second-quarter, and Alcoa cut its forecast for Chinese demand. The Fed’s Beige Book which is an anecdotal account of economic activity in 12 districts showed the economic continue to expand at a “modest” pace, with housing and auto sales showing moderate improvement.
After falling to weekly lows of $US1.2835 earlier, the Eurobegan a slow grind higher but still failed to make a convincing break to the upside of $US1.29-figure. At the time of writing the Euro is buying $US1.2865.
The Australian dollar remained support above 102 US cents despite weakness from key risk barometers such as US equities. The Aussie also performed well against its commodity counterparts the CADand Kiwi, which both succumbed to negative sentiment from both sides of the Atlantic. The local unit also built on gains against the Euro with the EURAUD pair breaking the downside of A$1.26 to weekly lows of A$1.2560.
Negative forecasts from the World Bank and the IMF this week have also kept market sentiment in check, with both organisations downgrading global growth expectations. The IMF forecasts that the global economy will grow 3.3 percent this year, down from July’s estimates of 3.5 percent, while revising 2013 growth down to 3.6 percent from 4.1 percent earlier this year. The IMF said “confidence in the global financial system remains exceptionally fragile,” while adding “Risks for a serious global slowdown are alarmingly high,” citing Europe as a major stumbling block. Earlier this week the World Bank cut growth expectations in East Asian and the Pacific. The organisation expects growth to slow from 8.2 percent in 2011 to 7.2 percent this year, before edging higher to 7.6 percent in 2013. The report noted weaker exports and lower investment growth will slice 1.6 percent from China’s bottom line in 2012, with GDP expected to fall from 9.3 percent in 2011 to 7.7 percent in 2012. Growth in the region is expected to bounce back to 8.1 percent in 2013, with policy easing and central bank stimulus expected to reverse the trend.
Data on today’s docket includes October Consumer Inflation Expectations at 10am AEST with the much anticipated September jobs report to be released at 11.30 AEST. The Australian economy is expected to show a net gain of 5,000 new jobs added to the labour force. Despite a net loss of 8,800 jobs in August, the official jobless rate edged lower from 5.2 to 5.1 percent, this fall is expected to be unwound with estimates showing the rate probably increased to 5.3 percent. Chinese new Yuan loan data is also scheduled for release in the domestic session. At the time of writing the Aussie dollar is buying 102.3 US cents.
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