Interesting night on stock markets with the Goldman Sachs and Citibank results although not terrible, particularly Citi which doubled profit, weighing on stocks a little. It was a similar story in the UK were the upgrade by Citibank of mining shares from neutral to buy along with Rio’s strong result yesterday still couldn’t forestall a down day.
So at the close in the US the Dow is down 65 points or 0.39% to 16,417, the Nasdaq is largely flat down just 0.10% while the S&P is down just 2 points or 0.13%.
In Europe there were small losses in the big markets with the FTSE closed down 0.07%. In Germany the DAX fell 0.16%, the CAC was 0.3% lower while stocks in Madrid and milan fell 0.66% and 0.85% respectively.
As a result the local futures trade on the ASX overnight sees the SPI 200 March contract down 6 poinst to 5266 bid.
It is worth noting bonds today because the data in the US and in Europe showed very little inflation, indeed we are still seeing disinflation. so on the SFE bond boards the 3′s are up 2 points to 97.07 (2.93%) while the 10′s rose 1,5 points to 95.89 (4.11%). These moves reflected the improved performance in US markets where the 10 year rallied to 2.85% after the inflation data showed a year on year rate of just 1.5%. It was similarly quiet inflation report in Europe with German yoy inflation printing 1.2% while Eurowide inflation was just 0.7% over the past 12 months.
Turning to foreign exchange markets the Aussie was the big loser but it sits at 0.8812 off the low of 0.8773 but still down 1.12% over the past 24 hours. There is no other way to put it than that the Aussie dollar was absolutely poll axed yesterday by the unexpectedly abysmal employment data trading down to 0.8773 before finding some support.
It is trading back this morning toward the previous low from the Christmas break of 0.8820 – this could prove some resistance but a move with the aggression that we saw yesterday took the short term technicals into very over cooked territory so a move toward 0.8835 today is possible.
Looking longer term the Aussie is now very close to the bottom of the big down trend it has been in since the high back in 2011 which comes in today at 0.8705. Having said that though if the Aussie closes the week below 88 cents the technicals suggest a move, in time and over many weeks, to 0.8060/0.8170.
It might hold for the moment but lower levels look like they are only a matter of time.
Looking at the AUDNZD cross is interesting at the moment and playing the crosses is a very good way to avoid purely US dollar moves most of the time. This means that fundamentals can often be more important on the crosses than pure flow which often dominates the bigger pairs against the USD. Aussie Kiwi is one of those pairs where what looks like kissing cousins can actually show good trending qualities.
This week the AUDNZD has fallen around 3 big figures losing 1.5 big figures alone yesterday – this is not one I often trade but I’m looking to put my toe in the water around this 1.05 region with a big stop under 1.04
The Euro is largely unchanged at 1.3605 with the Pound similarly quiet at 1.6356. Against the Yen and Swiss Franc though the US lost a little ground and sits at 104.92 and 0.9050 respectively.
On commodity markets it was a fairly quiet night with Gold largely unchanged at $1241.10, Nymex crude $94.05 Bbl although copper did fall 2 cents to $3.38 lb. On the Ags wheat rose 0.88%, corn was 0.53% higher but soybeans fell 0.3%.
There is no important data in Australia today but tonight we are expecting get the German Constitutional Court ruling on the constitutionality of the ECB’s bond buying program. We will also see retail sales in the UK and then building permits, housing starts, industrial production and the Michigan consumer sentiment survey in the US
Have a great day and good hunting
Greg
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NB: Please note all references to rates above are approximate