Australia: The concerns over the state of the global economy have increased over the past few days and the AUD has fallen as investors sought safe haven buying. The CHF and JPY have been strong beneficiaries though both the Swiss National Bank (SNB) and the Bank of Japan (BoJ) have been rumoured to intervene to normalise moves.

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The SNB did say this morning the CHF is “grossly overvalued”, also noting rates will be reduced from 0-0.75% to 0-0.25%, targeting the three month LIBOR rate. The SNB President Phillip Hildebrand said the SNB will be acting to boost liquidity in the CHF money market in coming day’s. These comments are an attempt to slow the strength of the CHF. Yesterday’s local data saw the release of the retail sales data for June which was down 0.1% for the month.

Retail sales and confidence are now the weakest in 50 years. Internet shopping, Europe’s sovereign debt concerns and America’s general economic woes, increased living costs in Australia and Federal Government’s rhetoric on MRRT and the proposed Carbon tax are all leading to consumers putting their hands deeply in their pockets and saving rather than spending. Alan Kohler spoke of the “Paradox of Thrift” last night in his finance segment of the Ch 2 news. So true. Also released yesterday was Australia’s international trade surplus data of $2052m, down from $2699m due to a 3% increase in imports.

Base metals were lower overnight, with copper down 1.5% while nickel fell 4%. Gold hit a new record high of US$1,672 an ounce on safe haven buying, crude oil fell to be trading at $US 91.93 a barrel as global growth concerns weighed on oil prices. There is no local data due for release today and we see the AUD testing lower levels.

Majors: In the US overnight equity markets finish firmer with the Dow up 0.3% the Nasdaq up 0.9% and the S&P up 0.5%. The US ADP employment data saw an increase of 114k in private payrolls slightly above the forecast of 100k. Also out in the US was the ISM nonmanufacturing data which fell to 52.7 down from the 53.3 in June while factory orders fell 0.8% in June. Tonight will see both the ECB and Bank of England have their policy meetings though no change is expected, while in the US will see the release of the weekly jobless claims data. What a week.

Economic Calendar
EU Interest Rate Announcement AUG
GE Factory Orders JUN
UK BoE Monetary Policy Committee Decision
US Initial Jobless Claims Jul

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