US dollar puts downward pressure on the AUD

Share Markets: 

Mixed earnings reports out of the US saw the S&P500 fall 0.4% and the Dow rise 0.3% on Friday.

Intel and General Electric disappointed the market while results for Visa and American Express were well received.

European markets were positive with the FTSE up 0.2%, the Dax up 0.3% and the French CAC40 index up 0.2%.


US long bond yields edged lower as uncertainties emerged regarding the pace of US economic growth.

Australian 10 year government bond yields were also down but remain above 4.0%. Australian 3 year yields edged lower and face a test this week with the release of the CPI on Wednesday.

Foreign Exchange:

The US dollar index moved higher putting downward pressure on the AUD.

Despite some weakness in recent statistics, the US Fed appears ready and willing to continue tapering its purchases of US government bonds. This is supporting the USD.


While the CRB index was flat, copper, gold and oil each saw modest increases. Oil traders appear positive about the outlook for the US economy while the gold price rose on comments by Fed officials regarding the need to continue stimulating the US economy.


No data of note was released on Friday.


New house prices in China's major cities rose more than 15% in December, led by Guangzhou and Shenzhen in the south, as local property curbs failed to deter buyers.

Prices increased in 69 of the 70 cities monitored by the National Bureau of Statistics.


Eurozone construction spending fell 0.6% in November, the third consecutive decline, to be down 1.7% over the year.

There has not been a sustained period of annual growth in the construction sector (i.e.  greater than 2 quarters) since 2007.

United Kingdom:

UK retail sales surged 2.6% in December.

The exceptionally strong result contrasts with the mostly subdued reports coming from the major retailers regarding the Christmas shopping season.

The UK's Office for National Statistics (ONS) acknowledged this by attributing the jump to smaller stores, and indeed the breakdown showed non-specialised stores, other and non-store retailing as the main drivers. Annual retail sales growth of 5.3% is the strongest in almost 10 years.

United States:

US housing starts fell 9.8% in December, with the single family dwelling component down 7% and unit construction down 15%.

Looking ahead, permits (building approvals) were down 3.0% with singles down 5% and units steady in the month.

US industrial production rose 0.3% in December. Mining was up 0.8% and utilities were down 1.4%. The manufacturing component rose 0.4% in December, supported by a 1.6% rise in autos.

US consumer sentiment eased from 82.5 to 80.4 in the preliminary University of Michigan survey for January, with current conditions down more than the outlook.

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