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Commentary: Resource dollars stabilize in mixed pre-holiday trading
00:00, 26 November 2013
With the Iran nuclear deal’s impact on markets fading quickly trading focus has returned to the upcoming US holiday and data announcements. It’s an interesting quirk of timing that just as US markets wind down for three days of travel, turkey, football and shopping, the pace of economic news picks up significantly. Tomorrow brings a flurry of announcements from the US with agencies rushing to get them out before the Thanksgiving holiday weekend. Essentially three days of data crammed into one. Focus then turns to Japan where a number of major month-end announcements are due to wrap up the week including PMI, retail sales, employment, construction and much more. With the exception of US indices which have rallied again carrying the Dow above 1,600, the S&P above 1,800 and the NASDAQ Composite decisively above 4,000, trading has been mixed today. We have been seeing come retrenchment and digestion of the action from the last few days. European indices traded lower following on from yesterday’s Nikkei and Hang Seng selloffs. Commodity markets have also been sluggish with Brent crude consolidation yesterday’s rally and other energy and metal markets holding steady after yesterday’s selloffs and rebounds. Currency markets have seen some capital moving back into defensive markets which may also be a normal correction of recent weakness in JPY and CHF. The resource group has underperformed over the last 24 hours, particularly AUD and NZD but has started to show signs of life as the day has progressed. As part of a speech on efficiency, RBA Deputy Governor Lowe suggested that the threshold for RBA intervention in FX markets is high, cooling speculation that the central bank may take action in the market to drive down the dollar as the RBNZ had done earlier this year. This has enabled AUD and NZD to regain their footing for now but they still have a lot of work to do in order to call off the bearish head and shoulders patterns that have formed over the last three months. Economic News Highlights of overnight announcements include: South Africa GDP 1.8% vs street 2.0% Hungary interest rate decision 20bps cut to 3.20% as was widely expected US building permits 1034K vs street 930K US house price index 0.3% vs street 0.4% US consumer confidence 70.4 vs street 72.6 US Richmond Fed 13 vs street 4 Upcoming significant announcements include: 8:45 am AEST NZ trade balance street ($350M) 8:00 am GMT Spain retail sales previous 2.2% 9:30 am GMT UK GDP street 1.5% 8:30 am EST US jobless claims street 330K 8:30 am EST US durable goods street (2.0%) 9:45 am EST US Chicago PMI street 60.0 vs previous 65.9 9:55 am EST US UoM consumer confidence street 73.1 10:00 am EST US leading index street 0.0% vs previuos 0.7% 10:30 am EST US crude oil inventories street 0.75 mmbbls 10:30 am EST US gasoline inventories street 0.50 mmbbls 12:00 pm EST US natural gas storage street (14 BCF) TBA Brazil interest rate 50 bps increase to 10.0% widely expected