Daily Market Update 19 August 2013 - Quiet calendar to keep markets on edge
US housing<http://www.census.gov/construction/nrc/pdf/newresconst.pdf> starts rose to an annual pace of 896k in July, an increase of 5.9% on the upwardly-revised 846k pace previously seen in June. While an improvement, the rise lagged market expectations for an increase of 900k with starts still some 109k below the recent peak hit in March. Mirroring the increase seen there, building permits, a forward indicator, also pushed higher after dropping 7.9% in June with an increase of 943k recorded. The result was in line with expectations and helped snap a two-month decline in total permits issued. Although both series were slightly disappointing, with homebuilder confidence continue to soar, a reliable lead indicator for future permits and starts growth, both are likely to show further improvement in the months ahead.
US consumer confidence fell unexpectedly in August with the Thomson Reuters/Uni of Michigan index sliding to 80.0. The result was well below the 85.1 reading struck in July, the highest reading seen in over six years, and expectations for an increase to 85.5 with the prospect for higher interest rates the chief catalyst behind the surprise result. Showing that both near-term and future expectations were impacted by the jump in rates, the current conditions index fell sharply to 91.0 from 98.6 in July, the largest one-month decline since July 2010, while the expectations index slid to 72.9 from 76.5. While a disappointing outcome, perhaps more importantly for the Fed, inflation expectations out 1 and 5-years held steady at 3.1% and 2.8% respectively.
US productivity rose modestly in Q2 after slumping 1.7% in Q1 with an increase of 0.9% recorded<http://www.bls.gov/news.release/prod2.nr0.htm>. Total output jumped by 2.6% for the quarter, a result that was higher than the 1.7% rise recorded in total hours worked. Showing that the improvement in output came at an increased cost, total labour costs also advanced, rising 1.4% after sliding 4.2% previously.
Eurozone inflation<http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-16082013-AP/EN/2-16082013-AP-EN.PDF> fell 0.5% in July with the annualised rate declining to +1.6%. Both readings were unchanged from the preliminary reading released earlier in the month.
The Eurozone trade surplus continued to widen in June with an increase to €17.3b recorded<http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-16082013-BP/EN/6-16082013-BP-EN.PDF>. The figure was higher than the downwardly-revised €14.5b surplus seen in May with a 3% fall in exports outpaced by a 6% decline in imports.
Chinese house prices continued to rise in July, albeit at a slightly slower pace, with an increase of 0.7% recorded. The rate was slightly below the 0.8% pace previously seen in June and left the annualised increase at 7.5%.
The Day Ahead (All times AEST)
Amcor, Bendigo & Adelaide Bank, Bluescope, Challenger Financial, Dexus Property and Fleetwood Corporation all report earnings today.
The ASX 200 looks set to start the week modestly in the red with SPI futures pointing to a fall of 7pts on the open. While this is reflective of modest falls on Wall St and hefty dividend payouts today, with most commodity prices continuing to push higher and the Aussie Dollar holding firm, it wouldn’t surprise if we manage to eke out a small gain by the end of today’s trading session.
The AUDUSD looks set to resume its battle with sellers above the .9200 level today with the pair currently fetching .9181. Should it successfully managed to crack this level, something it was unable to do on seven-separate occasions on Friday evening, it’s likely stop loss buying above .9220 will propel the pair higher before running into further selling below key resistance at .9300. On the contrary, should sellers above .9200 continue to repel the advance, it’s likely that the pair will find strong buying interest on any move back towards the .9150 level.
Australian new motor vehicle sales for July will be released at 11.30am this morning. On the regional front we’ll also receive New Zealand producer prices and Japanese trade figures for July.
There are no major data releases scheduled for this evening. Enjoy your sleep.