Market Brief(14-Oct-2011)

Asian equity markets are marginally weaker as the optimism following Slovakia’s “yes” vote of the ESFS has faded. The primary catalyst for the shift in sentiment was S&Ps downgrade of Spain from AA to AA- with outlook negative. This move follows Fitch’s downgrade of Spain just last week. As a result, the Hang Seng is down -1.12%%, and the Nikkei is down -0.82%% on the day. FX settled in comfortable ranges as the EURUSD traded between 1.3728 to 1.3795, however AUDUSD was able to break horizontal resistance climbing to 1.0228. The much hyped China inflation data came in benign as CPI printing in line with consensus at 6.1% and not to the upside has many had predicted. China PPI came in lower than expected at 6.5% yoy vs. 6.9% yoy expected. And on a final note, on a relatively quiet session, was Singapore GDP and policy adjustment. Singapore 3Q GDP growth came in at a whopping 1.3% qoq significantly stronger than the 0.8% anticipated. This number provides further evidence that global growth might be ready to slope upwards. In regards to policy MAS decided to ease the slope of the policy band but maintain gradual appreciation of the SGD NEER but no change to the width of the band was indicated.

There’s another light data calendar today with US retail sales, Michigan consumer sentiment index and business inventories. The US Retail sales for September is expected to come in at 0.4% vs. 0.0% prior read. Michigan consumer sentiment index for October s anticipated to rise to 60.0 from 59.4 prior print. US Business inventories for August is expected to rise to 0.5% from 0.4% read. G20 Finance Minister meeting begins today but we do not anticipate any tangible news out over the weekend.


By
M.Zohaib Gadit
Forex Trading Consultant