GDP (sa) q/q expected 1.4%, prior 1.4%

GDP y/y expected 16.3%, prior 2.4%

April to June data is quite old hat now, especially given the renewed COVID-19 outbreak and lockdown response, which will weigh on Q3 data. Nevertheless, the data should confirm the NZ economy headed into Q3 with impressive momentum. 

The NASDAQ index is on pace with less than a half-hour ago, to snap it's five day losing streak. The S&P index and Dow industrial average which were down five the last six trading days coming into today, will have pundits saying each are up two of the last three days with both gaining in trading today.  

Tomorrow at 8:30 AM, the US retail sales for the month of August will be released the expectations are for a -0.8% decline. This comes after a -1.1% decline in July. The expectations for July was for a -0.2%. The June retail sales rose by 0.6%. The May retail sales fell by -1.3%. So a another decline tomorrow would be the third in the last four months which is indicative with the slowing expectations for GDP growth

The past few days in equities have raised some red flags. The lower-than-expected CPI report should have been a tailwind for stocks. Instead, after a strong open they crumbled. It was like the ever-present dip buyers had vanished.

The main reason for today's gains is the threat of a shift to more oil for electricity. Bank of America estimates there could be as much as 1.8 million barrels per day of potential crude demand from that switch, as utilities balk at high natural gas prices.

The USDCHF has completed the down and up trading "lap". The pair is trading to a new session high of 0.92047. That is higher than the Asian session high of 0.92042. the move higher is also testing a swing level at 0.92057. That was the swing high going back to August 19. there have been other swing lows/highs near that level over the last week or so of trading.

He noted this period of gains comes after pandemic-induced weakness and that the BOC will stay the course. He also noted that the 40% surge in airfares in the report was a mirage. The component had been tweaked for months because of many missing routes but those were brought back en masse in this report.

The GBPJPY moved up to test the 100 day MA at 152.789. The high reached 152.84 but could not ignite a rally on the break. Helping the downside yesterday was a move out of risk and into the relative safety of the JPY. 

Looking at the NASDAQ index, the price moved down to test its 200 hour moving average currently near 14999.43. The price dipped below that moving average but could not sustain downside momentum. The sellers turned the buyers on the failed break.

The NZDUSD down to test its 100 day moving average in the Asian session at the 0.70729 level. The low price for the day reached 0.72726.going back to September 8 and September 9, the price declines had found support against that daily moving aveerage level.

Without detailing all that (which I have many times), I'll point out that the counter argument is that Beijing has plenty of ammunition. That's absolutely true and it's a good argument.

The flash crash of bitcoin back on September 7, saw the price moved down to a low of $42,900 (or thereabouts). The high price for the cycle move higher reached up to $52,956. The 50% midpoint of that range comes in at $47,928. Today, the price has extended above that midpoint further tilting the bias more to the upside at least in the short term. 

German DAX, -0.6%. The low for the day reached -0.7%. The high was +0.09%France's CAC -0.9%. It's low for the day reached -1.14%. The high was +0.09%UK's FTSE 100, -0.1%. It's low reached -0.27%. The high was +0.19%.Spain's Ibex, -1.5%. It's low reached -1.76%. The high was -0.12%Italy's FTSE MIB -0.9%. It's low reached -1.32%. The high was +0.13%

Societe Generale Research discusses its bias on AUD and GBP in the near-term. "Our Chinese economics team reckons the Chinese slowdown will prompt rate cuts, which is tangible, but when will it weaken the yuan - which appears glued into a narrow range? Even without that, however, we find no reason other than valuation (which doesn't help) to like the Australian dollar," SocGen notes.

The price move back to the upside took the pair back above its 200 hour moving average at 0.91815 and its 100 hour moving average at 0.91917.   The US highs is still below the high for the day at 0.9204 reached in the Asian session.. A swing area going back to August 11 (see blue numbered circles) comes in between 0.9199 and 0.92057. It would take a move above that level to further increase the bullish bias today.

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Recall from yesterday, the price did extend below that moving average line after the tamer than expected CPI, but the break was not for long. The price moved back higher and closed near session highs.

I've been warning about this for awhile. Things have gotten out of hand quickly in Europe and this is going to be a political crisis in short order as people and companies get slammed with heating and energy bills that they can't afford to pay -- at least without digging into broader spending.

There has been some minor buying on this but oil had already been sizzling today on expectations that some natural gas power demand will be switched to petroleum due to the energy crisis ongoing in Europe and elsewhere.

The GBPUSD moved higher to test it's 100 day MA yesterday at 1.3912 and found sellers against the key level.  A move back into the dollar on risk off flows (into the JPY, CHF and lesser extent, the USD) helped to push the pair away from that key MA as well.  

I've been warning about this for awhile. Things have gotten out of hand quickly in Europe and this is going to be a political crisis in short order as people and companies get slammed with heating and energy bills that they can't afford to pay -- at least without digging into broader spending.