Aussie dollar gains on strong risk appetite from the US

Share Markets:

Equities gained ground on Friday night, supported by expectations QE will continue for the Share Markets: Equities gained ground on Friday night, supported by expectations QE will continue for the remainder of this year.

Soft economic data released in the US diminished December tapering expectations.

The Dow rose 0.5%, the S&P500 gained 0.4% and the Nasdaq was up 0.3% for the session.

Bonds:

US government bonds were little changed for the session, with bonds edging lower at the long end (yields were marginally higher).

Australian three-year government bond yields (implied by futures) fell from 3.11% to 3.07%, while the 10-year yield fell from 4.18 to 4.12%.

Foreign Exchange:

The Aussie dollar gained ground against the major currencies as expectations of ongoing monetary stimulus in the US this year supported risk appetites.

This boosted the New Zealand dollar, which was stronger against the Aussie dollar and the other major currencies.

The US dollar fell against the Aussie dollar following the release of soft economic data.

The Yen weakened versus the Aussie and US dollars with ongoing QE expectations dimming the Yen's safe haven appeal.

Commodities:

Copper prices strengthened on the prospect of continued monetary easing in the US this year. 

Australia: No data was released on Friday.

Europe:

Euro zone inflation was confirmed at 0.74% in the year to October, with the core rate at 0.8% in the year to October, both unrevised from the advance reading.

A national breakdown shows that inflation in the bailout sovereigns is very soft, boosting their competitiveness within the Euro zone.

Spain and Portugal are both running at 0.0% annual rates, Ireland is at -0.1% for the year, while Cyprus and Greece are experiencing steeper declines of -0.5% and -1.9% for the year, respectively.

United States:

US industrial production was weaker than expected, falling 0.1% in October. Factory output rose 0.3%, although this was offset by a 1.1% pull-back in utilities and a fall in mining output.

Auto production fell 1.3% in October, reflecting the recent pull-back in auto sales. The softness in industrial production runs counter to the strength seen in the ISM factory survey.

The US New York Fed factory index fell from1.5 points to -2.2 points in November, the weakest reading since January this year.

Orders and shipments both turned negative, falling 13-14 points and jobs fell almost 4 points to 0, the weakest since June.

US import prices fell 0.7% in October, with petroleum prices off 3.6%, while other prices edged up 0.1%. Separately, wholesale inventories rose 0.4% in September, after a revised 0.8% gain in August (previously reported as 0.5%).


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