US initial jobless claims rose modestly to 278k last week. The reading, higher than the 267k pace of the previous corresponding week but below the 290k level expected, left the series 4-week average, a better gauge on the overall trend, at 292.75k, the lowest level seen this year.

The US trade deficit widened to $46.56b in December, a figure that was higher than the $39.75b level of November and forecasts for a decline to $38b. Imports rose by 2.2% to $241.44b while exports slid 0.8% to $196.43b. Whether the due to an industrial dispute on West Coast docks or ongoing strength in the US Dollar, the performance of exports will be monitored closely in the months ahead.

US non-farm productivity slid unexpectedly in the December quarter, contracting 1.8% compared to forecasts for an increase of 0.5%. The decline, the largest seen since the same quarter a year earlier, was a result of 3.2% lift in output being outpaced by a 5.1% jump in hours worked. Elsewhere labour costs surged 2.7%, well above the 1.0% gain expected, as hourly compensation rose 0.9% even as productivity slid 1.8%.

The European Commission released their revised winter economic forecasts for 2015/16 overnight. The group see economic growth of 1.3% across the Euro area in 2015, up from 0.8% in 2014. Elsewhere inflation is expected to fall to 0.1% before rising 1.3% in 2016 while unemployment is tipped to ease to 11.2% from 11.6% in 2014. Something to be optimistic about or merely the stuff of Fairy tales? Time will tell.

German industrial orders rose to a six-month high in December with an increase of 4.2% reported. The reading, higher than the 2.4% contraction of November and expectations for an increase of 1.5%, was led by a surge in orders for capital goods which rose 5.7%. Elsewhere orders for intermediate goods increased 2.8% while those for consumer goods fell 0.6%. Demand increased both at home (+3.4%) and abroad (+4.8%) with orders from the Eurozone rising by an impressive 5.9%.

As expected the Bank of England MPC held their key bank rate and asset purchase program steady at 0.5% and £375b respectively in February. As usual no statement was released alongside the decision meaning discussion, and indeed voting patterns, won’t be known until the minutes are released later in the month.

UK house prices rose by the most since May 2014 in January with the Halifax house price index surging 2.0%. The reading, following a 0.9% increase in December, left the annual rate, averaged over the past three months, at 8.5%.

Russian consumer prices leapt 3.9% in January, higher than the 2.2% lift expected, with the figure the largest month-on-month increase seen since February 1999. The figure saw the annual rate rise to 15.0%, the equal-highest level since September 2008.


The Day Ahead (AEDT)

The ASX 200 looks set to make it 12 gains in a row today, something that will beat the previous index record of 11 if realised, with SPI futures pointing to a gain of 39pts on the open. While it should be entirely baked in the cake, the RBA’s monetary policy statement on Tuesday basically outlined what be seen in today’s statement on monetary policy, it’s likely that downgrades to GDP growth, inflation and unemployment for 2015/16, something that will reinforce the view that the cash rate will continue to move lower, will assist the ongoing bid in higher-yielding sectors such as financials, consumer discretionary, industrials and telecommunications. Elsewhere the energy sector will likely outperform after being the laggard yesterday, crude oil was up a lazy 5% overnight, while materials are also likely to be bid after rallying strongly in the US overnight. If there is a risk heading into today’s session, 12-consecutive gains in a row has never been achieved in the 15-year history of the index, it’ll be that the RBA’s forecasts will not be as dovish as what markets currently anticipate, something that will lift rate expectations and see profit-taking accelerate before the US payrolls report tonight.

Like clockwork the AUDUSD has moved higher overnight as gains in crude oil prompted broad-based US Dollar weakness. While there may be some short-term volatility around the release of the RBA’s statement on monetary policy, unless the document offers up a surprise, particularly if more-hawkish than expected, the movements in crude oil futures will likely dictate which direction the pair travels in today. Support is located at .7800, .7780 and .7740, resistance at .7820, .7850 and again at .7880.

The Reserve Bank of Australia release their quarterly statement on monetary policy at 11.30am this morning. Look for downgrades for inflation, GDP growth and unemployment within their forecasts. I’ll be covering the release on Twitter as well as the Scutt Partners website.

Australia’s AIG-HIA performance of construction index for January will be released at 9.30am.

US non-farm payrolls for January will be released tomorrow morning at 12.30am. Payrolls are expected to increase by 234k, down from the 252k pace of December, with unemployment expected to hold steady at 5.6%. Average weekly earnings are tipped to increase by 0.3% after registering their largest monthly decline on record in December while the average work week expected to remain steady at 34.6 hours.

Aside from the US payrolls data releases this evening include consumer credit from the States, unemployment and building permits from Canada, industrial output from Germany and Spain along with trade figures from the UK and France. Dennis Lockhart, Atlanta Fed President and 2015 FOMC voter, will also be in action in the early hours of tomorrow morning.

Chinese trade figures for January will be released on Sunday afternoon.


Market Map Feb 6 2015




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