Global Market Report - November 8, 2012

Global Market Report – November 8, 2012

By Steve Biko / Published November 8, 2012 | 4:03 am

CURRENCIES | EQUITIES | COMMODITIES

9.25am US Eastern

Key Fundamentals:

Yesterday: US Crude Oil Inventories printed at +1.8M as expected, adding some pressure to the retreating price of oil at the time driven mainly by concerns over the “fiscal cliff” and strengthening USD. Yesterday saw a huge sell-off in the country’s markets across the board as risk-off sentiment ruled and cautious investors sought safety in the USD. Greek lawmakers narrowly voted for a fresh round of austerity measures amidst protests from the public opposed to this belt-tightening which includes tax increases and pension cuts. This averts a possible Greek exit from the Euro Zone for now but the country still must pass a revised budget on Sunday which keeps volatility pretty high. New Zealand announced disappointing jobs data with its employment change (QoQ) reading at -0.4% against an expected +0.3% and its unemployment rate shockingly growing to 7.3% against an expected 6.7%. This indicated a weak economy in the face of a strong NZD which is hurting the nation’s exports as they are now more expensive and unfavorable. Its neighbor Australia had strong jobs data with an employment change of +10.7K and an unemployment rate of 5.4% (against forecasts of +0.2K and 5.5% respectively), showing some strong fundamentals in the labor market and decreasing chances of a rate cut from the country’s Reserve Bank in the near term. However, some analysts still see a cut as soon as December in order to further spur economic growth. Japan’s core machinery orders (MoM) and current account balances both read negatively against forecasts, unsurprising in the light of the country’s recent economic weakness and monetary easing.

Overnight: German and French trade balance data both came in more or less flat at 17B and -5B against expectations of 17.2B and -5B respectively.

Earlier This Morning: The bank of England held its asset purchase facility and official bank rate steady at 375B and 0.5% respectively as most analysts expected in light of the country’s recent emergence from a double-dip recession and generally strong economic fundamentals. The European Central Bank also brought no surprises, holding its minimum bid rate at 0.75% as widely expected, with a rider that it is assessing the extent of the bloc’s economic downturn before implementing a new bond-purchase program. Its announcement that it is ready to buy Spanish and Italian bonds if and when the countries sign up to a formal European bailout program has somewhat calmed investors nerves so far. ECB President Draghi, in a press conference, maintained a downbeat view of the bloc’s economy and said that downside risk remains in control. This is likely to inform a more cautious approach among traders and investors with regard to European assets. Canadian trade balance came in at a positive -0.8B against an expected -1.4B and its new housing price index (MoM) held steady at 0.2%. Out of the US, strong trade balance data was released, reading at -41.5B against a forecasted -44.9B. Weekly unemployment claims also beat estimates of 367K, falling to 355K. This data underscores recent sentiment that the country’s economy is on the path to improvement and is likely to support risk in today’s trading.

Event Risk on Tap:

AUD – Reserve Bank of Australia Monetary Policy Statement due at 7.30pm ET
CNY – CPI (YoY) due at 8.30pm ET

MARKET UPDATES

Euro (EUR) Down to two month lows against most majors after ECB President Draghi said this morning that the bloc’s economic growth is expected to stay “weak”. Now down 0.2% against the USD to 1.2744

Great British Pound (GBP) Rose against both the EUR and USD after the Bank of England kept its asset purchase program and interest rate steady, adopting a wait-and-see approach in light of recent strong economic fundamentals. Now up 0.06% to 1.5992

Yen (JPY) Rose against the USD on safe haven demand after yesterday’s North American markets’ sell-off over concern about the aversion US “fiscal cliff” (the USD also benefitted from such safe haven flows, but remained lower than the JPY). Now up 0.1% to 79.8630

Australian Dollar (AUD) Up against the USD after the overnight release of strong jobs data boosted investor sentiment. Now up 0.01% to 1.0411

New Zealand Dollar (NZD) Fell to two month lows against the AUD after the release of shockingly poor jobs data which dented investor risk-sentiment. Flows were directed at the closely correlated AUD and less demand pulled the kiwi down 0.3% against the USD to 1.2238

Canadian Dollar (CAD) Pared losses against the USD this morning after the release of positive trade data from its biggest trading partner, the US, which includes rising exports to Canada. Also up on lower US weekly jobless claims data. Now down 0.04% to 0.9967

DOW/NASDAQ/S&P (US) On course to open slightly higher in about five minutes as investors are pleased by strong US ecodata released about an hour ago and a successful Greek austerity vote. Still facing background pressure from concerns over the “fiscal cliff”. All set to open up approximately 0.2%

FTSE/DAX/CAC (Europe) Recovered a good amount of yesterday’s losses in choppy trade after Greece passing a new austerity vote and the European Central Bank holding its lending rate steady both calmed investors’ nerves. Also supported by strong ecodata out of the US this morning. In choppy trade the FTSE is now up 0.2%, DAX up 0.2% and CAC up 0.4%

Oil Rose after yesterday’s sell-off as traders and investors applaud Greece’s austerity vote and strong US economic data. Now up 1.1% to 85.37

Gold Posted modest gains overnight into this morning as safe haven demand is supported by concerns of the US “fiscal cliff” and European sovereign debt situations. Some easing of concerns about both these issues has weighed on prices, capping gains. Also pressured by the Chinese general leadership conference where a new generation of leaders will be chosen over the next week. Now up 0.25 to 1722.00. Technically, bulls remain in control having breached near term resistance at 1721 and aggressively targeting profits at the 1755 region. Near term support is seen at the 1713 level

Silver Also up slightly on safe haven flows, now up 0.6% to trade at 31.84. Close resistance is seen at the 32.00 with a breakout leading bulls towards a 32.70 profit target. Close support is at the 31.60 level

Copper Posted some gains as investor and trader confidence has been boosted by Greece’s austerity vote, The ECB holding rates steady and strong economic data from Australia and the US all released overnight into this morning. Now up 0.5% to 3.46

Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice. Information may be delayed. Times are US Eastern. Prices and levels as at time of publication.