44 minutes ago | July 29th, 2014 01:48:46 GMT

S&P on Australia: Oz rating benefits from monetary, fiscal policy stability


S&P comments on Australia crossing the wires:

  • Australia rating benefits from wealthy, resilient economy
  • Australia rating benefits from monetary, fiscal policy stability
  • Australia real per capita GDP growth to average 2.9% 2014-17
  • Australia has the ability to absorb economic and financial shocks


Headlines on Bloomberg



  • S&P affirmed ratings on Australia at ‘AAA/A-1+’
  • Stable Outlook
  • Sovereign ratings on Australia benefit from its strong institutional settings, its wealthy and resilient economy, and high degree of monetary and fiscal policy flexibility, S&P says in statement
  • S&P expects Australia’s growth to remain a little below trend for some time

Risks remains for growth prospects, prosperity and credit qualify largely from growing dependence on trade with China

  • “If demand for Australia’s resources were to weaken sharply, there could be a range of disorderly dislocations in the economy, including in its labor and property markets”
  • “We could lower the ratings if external imbalances were to grow significantly more than we currently expect, either because the terms of trade deteriorates quickly and markedly, or the banking sector’s cost of external funding increases sharply.”


51 minutes ago | July 29th, 2014 01:41:37 GMT

BOJ’s Ishida: Japan’s economy continues to recover moderately


BOJ’s Ishida:

  • Japan’s economy continues to recover moderately
  • Exports continue to move sideways, lacking momentum
  • Structural factors, such as shift of Japan firms’ production overseas, may be partly behind soft exports
  • Capex expected to increase moderately as a trend
  • Next month’s Q2 GDP data likely to show negative growth but economy’s positive momentum seen intact
  • Effect of April sales tax hike likely to subside gradually
  • Labour market conditions likely hold key to whether household spending will remain firm
  • Want to scrutinise whether companies increasingly translate costs to consumers through higher prices
  • Environment surrounding exports to gradually improve as global growth picks up, though uncertainty remains
  • QQE  exerting intended effects on markets, Japan’s 10-year JGB yield remains at very low levels
  • Inappropriate to judge if BOJ’s price target met by looking at core CPI alone, must take into account other data too to gauge overall price trend

Headlines via Reuters


Bank of Japan Board Member Koji Ishida speaking to business leaders in Yamaguchi.

At 0500GMT, Ishida will hold a press conference to follow up.



55 minutes ago | July 29th, 2014 01:38:16 GMT

Australia press: Goldman Sachs says “Aussie dollar tipped to force RBA interest rate cut”


The Australian Financial Review reports on comments from “Goldman Sachs Asset Management’s bond expert Phil Moffitt”, speaking at the sidelines of the $935 billion asset managers’ client conference in Sydney:

  • The RBA may be forced to cut the official cash rate before the end of the year to beat back of a wall of foreign money that has driven the Australian dollar higher
  • Says the confluence of weak domestic growth, an expected fall in inflation as the carbon tax is discarded and the high currency was pointing towards a potential cut in the official rate
  • “The game plan has been the RBA to hold rates stable, and accept the currency is overvalued, in anticipation of the Fed moving [to lift US interest rates]”
  • “But the more the Fed works to pacify market expectations of a rate rise, the stronger the local currency gets and the harder it is for the RBA to manage”


  • Said the Federal Reserve will be forced into raising rates sooner than expected, which should aid the RBA’s desire for a fall in the currency
  • But strong demand for Aussie dollar fixed income assets will ultimately prove too much of a force for the central bank to ignore
  • A potential fall in the inflation rate later in the year could ultimately set up the RBA to act
  • “They may take the opportunity later in the year with inflation coming down because of the [repeal of the] carbon tax and the soft domestic economy to cut rates. That would come at the similar time that we expect US treasury rates to rise”

The full article is at the Australian Financial Review (may be gated): Aussie dollar tipped to force RBA interest rate cut


1 hour ago | July 29th, 2014 01:00:06 GMT

Australia – Housing Industry Association (HIA) New Home Sales for June: +1.2% m/m (prior was -4.3%)


Australia – Housing Industry Association (HIA) New Home Sales for June: +1.2% m/m

  • prior was -4.3%
  • Increase in Q2 to 2.0% q/q
  • Latest monthly gain was due to 15.9% rise in sales of multi-units
  • 1.0% drop in detached house sales

HIA chief economist Harley Dale:

  • “Growth in detached house sales (+2.6% in Q2) last quarter, together with very elevated multi-unit sales, augers well for new residential construction in addition to wider elements of the domestic economy”
  • “The new home building sector will provide a healthy contribution to broader economic growth in 2014-15″
  • “As the recovery enters its third year, the magnitude and duration of the current new home building up cycle is less certain than would usually be the case at this juncture.”


2 hours ago | July 29th, 2014 00:32:48 GMT

China strategist: “We anticipate a return to modest appreciation of the Chinese currency”


According to CIBC World Market strategists

  • “A recovery in Chinese activity and GDP data should underpin and/or restore investor confidence in the Chinese economy”
  • “After a period of stability for USD/CNY and USD/CNH, we anticipate a return to modest appreciation of the Chinese currency.”

We’ll get today’s fix in about 45 minutes. The highest fix for the yuan from the PBOC this year was 6.0930, set January 14; the lowest was 6.1710 on set June 3. Yesterday was 6.1622


2 hours ago | July 28th, 2014 23:55:52 GMT

Japan panel recommends wage increases


Headlines on Bloomberg:

  • Japan panel to recommend minimum wage be increased
  • To recommend increase of at least 10 yen

(10 yen? D0n’t spend it all at once, K?)


No further details, just headlines at this stage


3 hours ago | July 28th, 2014 23:30:33 GMT

Australia – ANZ Roy Morgan weekly Consumer Sentiment for the week ended July 27: 116.2 (prior was 113.5)


ANZ Roy Morgan weekly Consumer Sentiment for the week ended July 27, 116.2

  • +2.4% on the week
  • prior was 113.5
  • up >10% over the past 3 weeks (bouncing back after the poorly received budget

From ANZ chief economist Warren Hogan:

  • The good news is that the headline impact of the Budget appears to be temporary and the more enduring features of the economy, such as rising share and house prices, job creation and a stable world economy are now driving consumer attitudes to spending and finances


AUD/USD up a fraction on the data, back to session highs more or less (but don’t ask about the range so far … sheesh)


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