Euro Zone Investor Confidence is likely to continue to deteriorate in January after issuing the worst print ever since records began in 2002 as nearly every economic indicator sinks deep into the red. Economists expect the currency bloc's economy to shrink 1% in 2009. Switzerland's PMI is also on tap, with expectations calling for a new 13-year low.
Key Overnight Developments
* US Dollar Rises in Overnight Trading
* NZ Credit Card Spending Tumbles 2.3% in November
The Euro tried higher overnight but the bulls were quickly routed as the pair dropped towards the bottom of the now familiar range above 1.3840. The British Pound also succumbed to selling pressure, losing its grip on the 1.45 level.
Asia Session Highlights
New Zealand Credit Card Spending shrank -2.3% in November, easily overwhelming the meager 0.3% added in the previous month. Rising unemployment has weighed on disposable incomes, crimping consumption and weighing on overall growth. Traders are pricing in a 75-100 basis point interest rate cut when the Reserve Bank of New Zealand announces policy later this month as Governor Alan Bollard and company try to boost the sagging economy.
Euro Session: What to Expect'
The Sentix Investor Confidence reading is likely to see Euro Zone sentiment continue to deteriorate in January after issuing the worst print ever since records began in 2002. Investors are struggling to find a silver lining to the prevailing outlook for the currency bloc's economy: industrial production is shrinking at the fastest rate since 1993; trading terms deteriorated -78% in the year to October, the sixth consecutive double-digit drop in the annualized figure, with economists forecasting that 2008 will mark the first year in seven that the Euro Zone will see a net trade deficit; unemployment is at the highest in nearly two years. A recession was confirmed after GDP shrank in the second and third quarters and a survey of economists conducted by Bloomberg suggests the economy will shrink 1% through 2009.
In Switzerland, December's SVME-Purchasing Managers Index is seen falling to 35.0, putting sentiment in the manufacturing sector at an all-time record low and the worst in at least 13 years. Industrial Production fell to the lowest level in over 2 years in the third quarter as overseas demand was dwarfed by the deepening global slowdown. Exports make up a whopping 59% of overall economic growth, with machinery, chemicals and metals topping the list of times being sold abroad. On balance, this suggests that increasingly dour manufacturing sentiment points to sluggish overall performance, with economists predicting GDP growth will grind to a halt in the coming year