Daily Market Update 21 October 2013 - Quiet start to what will be a big week

Daily Market Update 21 October 2013 - Quiet start to what will be a big week

While economic data has largely taken a backseat in recent week’s thanks to the US government shutdown, that looks set to change in the days ahead with a raft of major US releases, including September non-farm payrolls, set to push earnings and ongoing concerns surrounding the government’s fiscal position into the background in favour of near-term policy movements from the FOMC. It all kicks off this evening with the release of existing home sales for September with the economic behemoth, non-farm payrolls, set to follow on Tuesday evening. While that will be the most influential event by far, the BLS and BEA have also tentatively scheduled that CPI, PPI, GDP and trade figures, all important releases that potentially could bring-forward or push-back the timing of Fed tapering, expected to be released in the week beginning October 28. While the US data deluge will dominate proceedings over the next few weeks, there is also plenty to keep local investors busy with Q3 CPI, something that many still believe could see the RBA ease monetary policy in November should it come out well below expectations, released on Wednesday of this week.


Canadian consumer prices rose more-than-expected in September with an increase of 0.2% reported<http://www.statcan.gc.ca/daily-quotidien/131018/dq131018a-eng.pdf>. The figure was above both the flat rate of August and expectations for an increase of 0.1% and left the year-on-year expansion unchanged at 1.1%. While the headline figure was hotter than expectations, ‘core’ CPI, that which excludes volatile items such as food and fuel, rose by 0.2%, a figure that was below the 0.3% rise that had been expected by the markets. Despite missing to the downside, like the headline figure, the annualised rate of change held steady at 1.3%.


The Day Ahead (All times AEDT)


Having closed at the highest level seen in over five years on Friday, the ASX 200 looks set to add to gains this morning with SPI futures pointing to a rise of 22 points on the open. With very little news out over the course of the weekend, the index is likely to follow the lead provided from Wall St with most of the gains likely to come from the energy, industrial, material and financial sectors. While there’s little doubt that the index will get off to a strong start, with many major market-moving events now fast approaching, coupled with the indices stellar run of late, it wouldn’t surprise to see some modest profit-taking creep in later in the session on what will be an otherwise slow day on the market.


The AUSUSD has opened relatively unchanged this morning after closing at the highest level seen since June 3, 2013 on Friday with the pair currently fetching .9670. With very little on the data front to move the pair today, we favour range trading throughout although, like equities, we suspect that profit-taking may emerge having seen the Aussie strengthen 8.4% against the greenback since the start of September. Support is found at .9650, .9605 and again at .9557 with resistance kicking in at .9678, .9700 and again at .9715.


While there’s nothing on the domestic front, regional data releases today include net migration figure for New Zealand along with Japanese trade figures for September. On the policy front, Bank of Japan Governor Kuroda is also expected to speak later on this morning.


A quiet-ish start to what will be a big week of economic releases this evening with US existing home sales, Canadian wholesale trade, Eurozone government debt-to-GDP ratios, Italian industrial orders and sales along with German producer price inflation all set to be released.


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