Aussie Exports Weaken
Australian exports fell sharply in August, reflecting softer commodity prices that are only now beginning to make their presence felt in economic data releases. Exports values fell 3.3% m/m and 12% y/y, reinforcing the view of our Australian economics team that the RBA is likely to cut again before year end − probably in November. The FX reaction was muted however and AUDUSD only surrendered 20 pips. Earlier, Tasmania became the latest of Australia’s states to lose its triple-A rating. Moody’s downgraded Tasmania one notch to Aa1. Again the FX reaction was underwhelming – but justifiably so on this occasion given the total stock of Tasmanian debt on issue is only A$ 3.1 bn according to Bloomberg. In Europe, delays surfaced in three guises: Moody’s announced that it is still reviewing Spain’s sovereign rating, and that it will make a decision this month (earlier guidance suggested a verdict in September); in Spain, Prime Minister Rajoy seemed to reject press speculation that he is ready to request external aid, and clearly indicated he is in no hurry to do so; finally, in Greece, Finance Minister Stournaras said it is unclear if ongoing negotiations with the Troika will have reached a conclusion in time for the EU Summit on Oct 18-19. Ahead today, final PMI surveys are due in Europe, and our economists only expect very slight revisions to the flash estimates.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank