Despite economic indicators falling short of expectation, US equity markets managed to squeeze out gains led by stronger commodities, which took the sting out of US output figures which failed to meet expectations. Industrial Production for October rose 0.1 percent, against expectations of a 0.4 percent rise. It was a similar theme for Producer Price index figures for October which recorded a rise of 0.3 percent, however failing to meet the 0.6 percent expected.
Sterling rose to three month highs overnight as the UK Consumer Price Index recorded a rise 0.2 for the month of October, taking the annual inflation rate to 1.5 percent. Inflation growth in the UK has been largely attributed to the stabilising of fuel prices which a year ago saw a dramatic decline recording a fall of 6.1 percent. The pound rose to highs of US$1.6873 but failed to maintain momentum, coinciding with broad strength from the US dollar against major counterparts. All eyes now on the minutes released by the BOE in tonight's session for the November meeting. Across the channel we saw Euro-Zone trade balance post a surprise surplus of EUR$6.8b in September surpassing the EUR0.9b expected.
A turbulent night for the Aussie dollar falling to lows of US$.9237 mirroring movements on the Euro which succumbed to profit taking early in the European session. The lack of support for the Aussie kicked off yesterday on the back of the RBA minutes which failed to any shed light into near term movements on interest rates. At the time of writing the Aussie has regained some composure currently buying 93 US-Cents.
We expect the breather to continue in the domestic session with little upside to be taken from equity markets - although we could see some reaction from key data in the domestic session, namely Westpac leading index figure to be released, also the Wage Price Index which is expected to rise 0.7 percent in the third quarter from 0.8 percent in the second.