UD has had a rough ride overnight getting hammered against USD, CAD NZD and other currencies after RBA Governor Stevens ripped the rug out from under the recent AUD rally. Speaking at a conference in the US, Governor Stevens suggested he would be surprised if the Aussie Dollar didn’t fall further. It appears he may be switching focus back to the Dollar to support the economy as he also indicated that while interest rate cuts weren’t completely useless, they are losing effectiveness. Still, he left the door open to another rate cut if needed. Today, AUD could be particularly active against NZD with the pair approaching parity once again.
US and European indices shook off yesterday’s selloff in China sensitive markets and rallied to start their trading week. Traders in Europe breathed a big sigh of relief that the Eurozone got through the weekend without Greece exiting or going into default. This situation clearly isn’t over, however as Greece’s Federal government announced it is scooping up all the excess cash held by the country’s municipalities to service its debt and try to avoid default while negotiations continue.
US indices, meanwhile are coming off a fine day to kick off a big week for earnings. US indices regained much of Friday’s losses and responded positively to better than expected earnings out of Morgan Stanley and Hasbro. Perhaps the most important earnings news of the day came out after US exchanged closed with IBM and Lam Research beating the street on earnings and guidance. A lot of the concern about the USD impact on earnings has centred on the technology sector. These results indicate that some tech companies may not be impacted as much as others.
IBM $2.91 vs street $2.82, guides 2015 FY to $15.75 to $16.50 vs street $15.85
Lam Research $1.40 vs street $1.30, guides next Q to $1.39 to $1.53 above street $1.35
Canadian National $0.86 vs street $0.85, guides 2015 EPS growth above 10%.
Significant announcements released overnight include:
Germany producer prices (1.7%) vs previous (2.1%)
Eurozone construction output (3.7%) vs previous (3.0%)
UK Rightmove house prices 4.7% vs previous 5.4%
ECB QE weekly update €73.3B vs previous €61.7B
Upcoming significant announcements include:
3:00 pm AEDT Japan leading index previous 105.3
8:30 am BST Sweden unemployment rate street 8.3%
10:00 am BST Germany ZEW current street 56.5
10:00 am BST Germany ZEW expectations street 55.3
4:00 pm EDT Canada federal budget
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