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NZ 3rd Quarter GDP Shows Economy Continuing to Contract The New Zealand economy contracted for a third straight quarter, extending the nation's recession and increasing the likelihood that the central bank will cut rates from its current 5.0%. GDP for the quarter declined 0.4% after falling 0.2% in the second quarter. UK 3rd Quarter GDP Revised Lower in Final Version Third quarter GDP growth in the UK was revised lower in the final version to show a 0.6% contraction in growth as opposed to the 0.5% decline seen in the advance and preliminary versions. The UK economy is facing a rise in unemployment, with the number of people receiving jobless benefits up 75.7K last month. With housing prices continue to fall as well, consumers are spending less, impacting manufacturing and services sectors. Manufacturing fell by 1.6% in the 3rd quarter, the largest decline since the 4th quarter of 2001. UK Services Decline 0.2% An index of services for the three months through October showed a decline of 0.2%, which was better than expected. Still it's the 4th month in a row that the index has been negative. GBP/USD - Pound Weakens Following UK GDP Data
The Pound-Dollar fell in today's trading following the weaker GDP release. It has been sliding the past 5 sessions, though the rate of its decline has slowed. Today, the pair retested support at the 1.4670 level in NY trading. EUR/CHF - Swiss Franc Gains on European Stock Losses
Stocks in Europe traded lower, which helped increase the value of the Swiss Franc. The Euro-Franc pair slid about 160 pips from its intra-day high near 1.5310. That extends this week's fall to 230 pips, as the pair broke below short term support yesterday. With the US Dollar losing its allure as a safe-haven, the Swiss Franc is taking that mantle with gusto. US GDP Data Matched Preliminary Result Turning to the US, the final version of 3rd quarter GDP matched the preliminary estimate of -0.5%. There were downward revisions to corporate profits and exports, though an upward revision to residential investment. The US recession deepened in the 3rd quarter as consumer spending dropped to its lowest level in three decades. Expectations for the 4th quarter are grim as well as the crisis in financial markets intensified in October, choking off credit to businesses and consumers, forcing an even bigger reduction in spending. US Existing Home Sales Plunge in November, Prices Tumble Existing home sales plunged 8.6% in November, falling to an annual rate of 4.49 million units. In addition to a drop in sales, prices of existing homes fell 13%, which was the biggest fall on record. The collapse in sales and prices, means there will be more home owners forced into foreclosure, not to mention a reduction in consumers wealth and purchasing power. US New Home Sales at 17 Year Low New home sales fell in November to a 17-year low as credit dried up. Purchases fell 2.9% to an annual pace of 407,000, and October's figure was revised down as well. The housing recession is having a very difficult time finding a bottom as the economy continues to deteriorate. US Home Prices Down 1.1% According to OFHEO A separate government house price index showed prices down 1.1% in October, a slightly better result than anticipated. For the 12 months ending in October, U.S. prices fell 7.5 percent. US Richmond Fed Drops to -55, Revised UMich Survey Shows Improvement In two more releases from the US, the Richmond Fed index showed manufacturing activity in the central Atlantic region contracted at a deeper pace in November. The index was pushed sharply lower to -55, as shipments, new orders and employment gauges fell further into negative territory. And finally, the revised version of UMich consumer sentiment rose to 60.1 as lower prices provided some needed relief to consumers. USD/JPY - Yen Weakens on Intervention Talks
Action was muted to day in Dollar pairs, especially against the Euro. The Dollar-Yen pair, despite the poor housing news climbed higher today, breaking above its short term resistance at 90.30. Japanese officials have let it be known that they may be intervening in the markets to lower the value of the Yen, in an attempt to help the export market. Stocks in the US fell in late afternoon trading, which stalled the rise of the pair at 90.80. Tonight's and Tomorrow's Releases
Tonight, Japan
will post a measure of confidence in the manufacturing sector and overnight the
Swiss National Bank releases its monetary policy assessment.
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