Global Markets Overview - 5-3-13

With the FOMC and ECB meetings out of the way now, investors will be encouraged to see central banks remaining committed to stimulating the global economy. There has been increasing pressure on the ECB and BoE to join other major central banks in conducting easing measures.

The ECB certainly seems like it is ready to act and some would say it is about time, considering the steady decline we've been seeing in eurozone economic data for a while now. Of course the biggest move was in the euro, with an initial spike to $1.3219 on the back of the rate decision greeted by sellers as Mario Draghi's comments hit the wires. Draghi's acknowledgement of the inherent weakness in the eurozone and the potential for negative rates resulted in EUR/USD selling all the way down to $1.3038. The pair is currently sidelined with $1.3000 continuing to hold in the near term. The US dollar was also underpinned by better-than-expected trade balance and unemployment claims readings. Commodities managed to recover from their lows and this aided AUD/USD, which finally bounced off lows in the $1.022 region. Locally we have PPI data to look out for today but we feel moves in commodities markets will have a bigger impact on how the pair trades today. USD/JPY traded through ¥98 to a high of ¥98.40 on some comments by BoJ Governor Haruhiko Kuroda. Gov Kuroda commented that Japan's economic recovery will become clear from mid-2013. Although this isn't anything ground-breaking, it certainly inspired some investors to push USD/JPY higher. With Japan shut today in observance of Constitution Day, we are unlikely to see any big moves in the pair until the non-farm payrolls later today. The Fed has made it clear that jobs numbers and inflation will be the key readings for QE and therefore there will be plenty of attention on tonight's data. The market is looking for a print of around 146,000, with unemployment flat at 7.6%. Any major variations will have a significant bearing on the greenback.

Ahead of the open, we are calling the ASX 200 higher by 0.6% at 5160, which leaves us up 1.2% for the week. The improvement in the commodities space should underpin some of the resource names. BHP's ADR is pointing to a 0.9% gain to 32.06, despite iron ore prices (-3.5%) trading lower. Gold/copper stocks are likely to get off to a good start given the gains seen in the two metals. Westpac's much-anticipated first-half results were released this morning and will be the highlight of the session. WBC has maintained the trend, delivering on cash earnings ($3.53 billion versus consensus $3.47 billion), while an interim dividend of 86 cents a share has been topped up with a special fully-franked dividend of 10 cents a share. This really is the icing on the cake and no doubt, will send yield-hunters into a frenzy and likely trigger a rally in the banking space today. Macquarie Group's full-year earnings have also hit the wires and at first glance they also seem to be quite solid with cost efficiencies driving profit growth. As a result, everything else in the market will be a sideshow to the banking space today.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

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