US homebuilder confidence fell fractionally in January with the NAHB index slipping to 57. The reading was below the upwardly-revised 58 level of December, also the same figure expected for January, with small declines in single-family sales expectations (-4pts) and prospective buyer foot traffic (-2pts) offsetting a steady reading for single-family home sales.

German investor sentiment soared in January with the ZEW economic sentiment gauge rising to 48.4. The reading, the highest level since February last year, was well ahead of the 34.9 level of December and expectations for an increase to 40.0. Mirroring the move in expectations the survey’s current conditions measure also bounced, logging an increase to 22.4 from 14.8 seen previously. While both have jumped significantly since late 2014 it’s clear that the survey is now more of gauge on ECB easing expectations rather than on actual sentiment towards the economy. Underlining this point, at +52 points, the 4-month gain in the sentiment index has only been bettered twice in the past four years. Once when the ECB announced the introduction of their LTRO program in late 2011 and again in late 2012 upon the commencement of their OMT program.

German producer price deflation intensified in December with a decline of 0.7% reported. The reading, below the flat reading of November and expectations for a decline of 0.4%, was the steepest monthly contraction since July 2009 and left the annual rate at -1.7%, a low not seen since March 2010.

Eurozone government finances improved marginally in Q3 2014 with the seasonally-adjusted deficit-to-GDP ratio declining to 2.3%. The reading, less than the 3.1% level of a year ago and 2.5% rate of Q2, was driven by an improvement in revenues which increased 0.1% to 46.7% of GDP whilst expenditures held steady at 49.1%.


The Day Ahead (AEDT)

The ASX 200 looks set to play catch up today to gains recorded offshore with SPI futures pointing to a rise of 17pts on the open. While the index is due a bounce, it has underperformed most major international bourses of late, one suspects that volumes will be down as investors await tomorrow evenings key ECB policy meeting. From a sector perspective gold producers should benefit from an ongoing bid in spot while BHP’s Q4 production report will be influential on resources given its sector weighting. With domestic consumer confidence figures also on tap look for movements in consumer discretionary names post-release, particularly if well away from expectation.

The AUDUSD has eased lower overnight, largely as a result of renewed weakness in the EUR and JPY, the two-largest components in the USD Index, with the pair currently fetching .8175. While there will be some short-term volatility in the pair around the New Zealand CPI release at 8.45am the performance of EURUSD and USDJPY before central bank policy decisions ahead will likely determine which direction the AUDUSD takes today. Bids are located at .8170, .8150 and at .8130 with resistance located at .8220 and again at .8250.

Australian consumer sentiment for January will be released at 10.30am this morning. After plunging 5.7% in December it will be interesting to see whether confidence has improved over the holiday period. Elsewhere in the region we’ll also receive New Zealand Q4 CPI at 8.45am. Markets are looking for a flat quarterly reading, down from an increase of 0.3% in Q3, with the annual rate tipped to dip to 0.9% from 1.0% seen previously. On the policy front the Bank of Japan will also deliver their monetary policy decision for January later in the session.

US President Barack Obama will deliver his State of the Union address from 1pm this afternoon.

Data releases this evening include housing starts, building permits and the latest MBA mortgage market index from the States along with UK unemployment. On the central bank front we’ll also receive the minutes from the Bank of England MPC January meeting as well as policy decisions from Canada and Brazil.


Market Map Jan 21 2015


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