Today’s Commentary
Markets continued to consolidate overnight ahead of the US interest rate decision tonight and the UK and EU decisions tomorrow, although no changes are expected by any of the central banks. The only market to buck the trend has been gold which has hit new highs and now sits above USD 1,080.00/oz.
News out of the UK that Britain’s two largest retail banks, the Royal Bank of Scotland and Lloyds Banking Group will receive a further GBP 31 billion in assistance shook confidence in the global banking system and the FTSE finished down 1.3%. The resulting flight to safety saw the USD index briefly touch a one month high and British taxpayers could be heard groaning from the continent.
The RBA took the expected move by raising interest rates by 0.25%. The press release only revealed that the bank plans to tighten conditions “gradually” and was largely identical to last month’s. The AUD fell slightly following the announcement and offshore data quickly dominated the currency’s direction again.
At home Statistics New Zealand revealed that our labor costs rose 0.40% over the last quarter. It’s a low number for the wage index and signals a lack of pressure on inflation levels which will keep the RBNZ happy. Our only major scheduled release for the remainder of the week is the unemployment update due tomorrow morning which is expected to show unemployment rising to 6.4%.
Upcoming Announcements:
• 04 November 09: AU Retail Sales
• 04 November 09: US FOMC rate decision
• 05 november 09: AU Trade Balance
• 05 November 09: EZ ECB Interest Rate
• 05 November 09: UK BoE Interest Rate
By Sam Spink - McCarthy, Corporate Dealer
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