Daily Brief

Daily Brief

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No mention of Brexit

Inconclusive

An inconclusive day produced renewed uncertainty about Sino-US trade and brought no particularly earthshaking economic data from Europe or North America. Sterling and the US dollar shared the lead with an average gain of 0.3%. The NZ dollar at the back of the field was 0.6% behind them.

Euroland's ecostat agenda was almost statistic-free. Eurostat reported that euro zone producer prices increased by 0.1% in September and were down by 1.2% on the year, also as forecast. The euro did move lower after the news, and is half a cent lower on the day, but the 45-minute gap between statistic and decline suggests no cause-and-effect link with the easily-ignored producer price index.

Britain's contribution was the services sector purchasing managers' index. At 50.0, it was better than expected and exactly on the cusp of contraction and growth. The authors of the index cuttingly styled the situation as "Service sector flatlines in October" but investors were more charitable. They had been expecting a 49.7 shrinkage so the 50 breakeven was at least a relief, if not a delight.

US trade deficit narrows

America's balance of trade deficit for goods and services was smaller than expected in September, with imports falling 1.7% and exports down 0.9%. At the same time, Canada also reported an overall decline in trade and a slightly wider than expected deficit in goods. 

America's deficit with China shrank by $900 million to $28 billion. Unfortunately that narrowing came from a 10% fall in exports and just a 5% reduction in imports. The numbers might or might not encourage Beijing and Washington to compromise on their trade negotiations. The latest story is that China, before it moves any further with the talks, is demanding the removal of all US tariffs imposed since last summer and the White House is reluctant to comply.

The two US services PMIs were slightly adrift from forecast: Markit missed the 51.0 prediction at 50.6 and the ISM beat forecast by more than a point at 54.7. Markit's reading did not hurt the dollar and the ISM's helped it higher.

NZ jobs miss

The second losing day in a row for the Kiwi cost it more than a cent against sterling and a third of a US cent. After a moderately promising start, it began to move lower in mid-morning. Disappointing NZ employment figures contributed to the decline but were not at its root.

The quarterly employment report showed unemployment rising to 4.2% in Q3 after an 11-year low of 3.9% three months earlier. It was worse than the 4.1% expected by investors, as was the 0.2% increase in total employment.

Europe will be making up for Tuesday's statistical calm with German factory orders, Euroland retail sales and the slew of services PMIs put back from yesterday. Canada releases the Ivey PMI and the United States reports on nonfarm productivity and unit labor costs. Australia's trade figures come out tonight.

GBP: Services sector breaks even

GBP: Services sector breaks even

USD: Trade deficit narrows

USD: Trade deficit narrows

EUR: Flat against the USD

EUR: Flat against the USD

NZD: Unemployment off its low

NZD: Unemployment off its low

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