Australia City

Quiet End To A Big Week In Australia

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Australian shares are trading flat this Friday afternoon after having one of the best weeks Australia has seen in many years. The close above and rally through 5000 on the ASX 200 is a significant milestone and signals investors optimism for 2013. The ASX 200 closed the week at 5033.90, down 3 points on the day. The only news-making event so far has been a disappointment with Rio Tinto’s earnings. The company posted its biggest loss in 15 years and the stock closed down $1.92 to $70.15. The company lost $2.90 billion last year after taking writedowns totaling $13.98 billion.

Reserve Bank Of Australia Assistant Governor Optimistic On China

Christopher Kent, the Assistant Governor of the Reserve Bank of Australia, says that China’s demand for commodities will remain strong. He says that even thou China won’t grow as fast as it once did but because their economy is so much larger, that an incremental increase in demand is very large. That is bullish for the Australian economy and Australian mining stocks.

RBA Board Member Echoes Similar Sentiment

John Edwards, a Reserve Bank of Australia board member, said today that Australia hasn’t seen the mining boom yet. He says that the resource sector’s share of Australia’s economy is the same as it was 30 years ago. Mr. Edwards further said that he sees mining output increasing and helping boost GDP.

ANZ Bank Profit Drops 20%

Australia and New Zealand Banking Group reported that first quarter profit dropped 20% on shrinking margins. The company is focused on overseas operations as demand for mortgages in Australia remain weak. The stock fell 29 cents to $27.77 on the disappointing results. The stock thou still remains 11 percent higher for the year.

New Zealand Retail Sales Come In Strong

Economists had been looking for 1.4 percent increase in New Zealand retail sales for last quarter, but the data come in at a much better than expected 2.1 percent. This was the biggest gain in retail sales since 2006. The New Zealand economy is performing better than Australia and the kiwi continues to strengthen against the Aussie and the US dollar. The kiwi is trading at .85083 to the US dollar and 1.21721 to the Aussie dollar. With the data in New Zealand being strong, look for the Reserve Bank of New Zealand to possibly raise interest rates. While other economies are cutting interest rates, a country that could possibly raise rates will get the investment flow into its currency. Binary and forex traders should look to continue to play the long side in the kiwi and buy calls.

Yen Strengthens Ahead of G-20

Traders are covering their bearish bets on the yen ahead of the G-20 meeting in Moscow this weekend. The G-20 could release comments pertaining to the recent strength in the yen and that has traders wanting to pull some money off the table. For binary and forex traders, buying any currency against the yen has been a huge winner in the past few months.

Metals Remain Weak As Large Investors Sell

Gold and silver continue to trade under pressure as the global recovery lessens the safe haven demand and a report showed that prominent investors George Soros and Louis Bacon cut their gold holdings. As the global economies continue to strengthen, most analysts see less need to hold gold in their portfolios. Gold doesn’t pay dividends and investors right now would rather own equities that do.

Gold is trading at $1633.70, silver $30.35, platinum $1693.10, palladium $761.75 and copper $3.745.

Economic Data Calendar

  • 0800 Spanish CPI (MoM) -1.4% forecast 0.1% prev (EUR)
  • 0930 British Retail Sales (MoM) 0.4% forecast -0.1% prev (GBP)
  • 0930 British Retail Sales (YoY) 0.8% forecast 0.3% prev (GBP)
  • 1330 Canadian Manufacturing Sales (MoM) -1.00% forecast 1.70% prev (CAD)
  • 1330 NY Empire Manufacturing Index -2.0 forecast -7.8 prev (USD)
  • 1415 US Industrial Production (MoM) 0.2% forecast 0.3% prev (USD)
  • 1455 Michigan Consumer Sentiment 74.8 forecast 73.8 prev (USD)

That’s about it on the data front to end the week. Hope all binary and forex traders have a great week and be sure to check back next week for the latest!