Intraday Market Thoughts

Awaiting UK Data, German Auction, Latest Premium Trades

by Kyle Morrison
Dec 7, 2011 9:15

UK Industrial and Manufacturing production (Oct) German and Italian industrial production, German bond auction, Greek parliament votes on new budget to get next bailout tranche, AUD Q3 GDP remains robust. Last night's Premium trades are up.

Sterling awaits the October industrial and manufacturing data, which are expected to disappoint further. Septembers numbers werent great with output stagnant, but Octobers are expected to be worse with a decline of 0.3% on both measures expected. The outcome is is likely to increase the calls for the Bank of England to announce an increase to the asset purchase scheme in Thursdays meeting tomorrow.

Yesterdays unexpected jump in German factory orders by 5.2% has raised expectations that the German economy may not be as stagnant as it has been feared. This has raised hopes in some quarters that todays October Industrial production data could well similarly surprise to the upside. Expectations are for a rise of 0.3% against the decline of 2.7% in September, however expectations are rising that the number could surprise to the upside.

Todays German bond auction of 5bn of five year notes will be closely watched given the failure of the 10 year auction a few weeks ago.

Industrial production in Italy is expected to continue to shrink in October, though by not as much as September, when it slumped 4.8%, but still by 0.3%.

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Last nights decision by the Greek parliament to pass the latest austerity budget in the face of further civil unrest, appears to ensure that the country will get its 8.8 bln aid tranche and enabling it to meet the next bond redemption payment.

Despite concerns about a slowdown in the global economy reflected in yesterdays decision by the RBA to cut interest rates by 25 basis points, the Australian economy appears to be ambling along quite nicely with Q3 GDP coming in at 1% Q/Q with the annualised figure jumping from 1.9% to 2.5%. The Australian dollar looks to be once again retesting towards the 1.03 level.


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