European Highlights 14 August 2014
Bonds and Equities -
There has been a slight retreat back after this morning's better bid scenario on core paper which continued from yesterday's session with the German and French weaker 2Q GDP figures adding further momentum. As we head further into the morning the Euro-area wide print for inflation (july y/y) came in on the button while the 2Q GDP q/q came in a little weaker at 0% (vs. 0.1% expected). Even despite this mornings retreat from earlier high levels the 10y German bund yield continues to print at new record lows at 1.01%. Gilts have also seen a small sell off from earlier levels but remaining on the front foot with the 10y yield -3bps.
Equities have steered modestly into the red.
Asia FX and News -
NKS: PM Abe plans to unleash array of stimulus measures after a temporary slowdown caused by a sales tax hike. Aust: iron ore price slumped to its lowest in 2 months as investors fret about the strength of the Chinese economy.
Bank of Korea cut Base Rate of 2.50% to 2.25%.
Tele: Holden warns car manufacturing could close early and axe 50k jobs if Gov't sticks to decision to cut support.
GBP remained under pressure as Cable hit a 4m low as the post US retail sales USD sell off continued to reverse. USD/JPY squeezed to 102.65 as stops hit above 102.55-60, NZD better bid as retail sales came in above expectation, AUD/NZD down to 1.0965 as AUD was weighed by ore prices and China worries. EUR/USD was offered at 1.3355-60, well off Wed's highs, EUR/CHF also easing lower to 1.2115. .
Nikkei and JGBs -
N225 posted 4th straight gain, +0.66% at 15314.57. JGBs firmer, 10-year yields -0.005% at 0.500%, a 16m low .
European FX and News -
EUR/USD saw an early dip as France & Germany both posted disappointing Q2 GDP, but there was again plenty of demand below 1.3350 and the pair has edged higher over the session to hit a high at 1.3395.
Cable is off the 1.6655 low but overall GBP still in retreat as a brief dip below .80 on the German GDP was reversed, the high no w.8026.
USD/JPY has eased lower as equities lose ground, supported around 102.30 with no expectation of stops unless we see a break of 102.00.
There has been nothing as yet from the SNB as EUR/CHF continues to look heavy, though slim risk/reward looks to have encouraged buyers around 1.2115.
NZD/USD has traded back over .8500, AUD.USD also reversing a dip below .9300 although AUD still giving best to the NZD. USD/CAD finally broke below 1.0900 despite many traders staying out ahead of the 2nd attempt at July jobs data tomorrow.
No data in Scandinavia today and both SEK and NOK are marking time against the EUR and each other.
* Japan: Core Machinery Orders for Jun +8.8%m/m, vs +15.3% exp; -3.0%y/y vs +3.3% expected. July-Sept core machinery orders seen +2.9%q/q. April-June core machinery orders -10.4%q/q.Japan government says machinery orders are seesawing. April-Jun orders post first quarterly decline in 5 quarters.
* UK: RICS House Price Balance falls to +49, weakest since Feb; down from downwardly revised June 52.0. Weakness centred around London. With momentum behind London's property boom appears to be fading. RICS buyer enquiries fall at fastest rate since April 2008.
* NZ: Retail Sales Volume in Q2 was +1.2%q/q, vs +1.0% exp; Actual retail sales +3.8%q/q, vs +3.4% exp. The 7th straight quarters of volume growth on back of the growing economy.
* NZ: Manufacturing PMI 53.0 in July, down from upwardly revised 53.4 in June. Still above the key 5 0.0.
* Germany: GDP in Q2 has come out at -0.2%q/q (consensus -0.1%) and 1.2%y/y wda), following a revised 0.7%q/q (previous 0.8%), 2.3% y/y in Q1.
* Portugal: Portugal's economy grew 0.6% in the second quarter following a 0.6% decline in Q1. This was marginally stronger than market expectations of 0.5%q/q growth. This pushed the year-on-year rate down to 0.8%y/y from 1.3%y/y in Q1, still higher than expectations of 0.7%y/y.
* Eurozone: Flash Q2 GDP has turned out slightly below expectations at 0.0%q/q (consensus 0.1%) and 0.7% y/y,from an urevised 0.2% Q/Q in Q1 (0.9% y/y). The downside surprise in Germany (-0.2%Q/Q) and the negative outturn in Italy (also -0.2% Q/Q) were balanced by increases in other countries, including Spain, Portugal, Belgium and the Netherlands. France was flat.
* Eurozone: Final July HICP is unrevised at 0.4% y/y (-0.6%m/m). On the 7th August Draghi noted that the fall to 0.4% didn't come as a surprise and 'it reflects primarily lower energy price inflation, while the other main components of the HICP remained broadly unchanged'.
Still To Be Released -
12:30 GMT - CA: House Price Index (Jun) % m/m (Mkt: 0.2 Prev: 0.1)
12:30 GMT - US: Import Price Index (Jul) 4cast: -0.5% m/m (Mkt: -0.3 Prev: 0.1)
12:30 GMT - US: Initial Claims (41860) 4cast: 295k (Mkt: 295 Prev: 289)
Events & Auctions:
17:00 GMT - US: 30y bond auction - USD 16 Bn (Act)