In figures released yesterday China’s manufacturing activity has continued to show signs of weakness after the official PMI figure fell short of the all important 50 threshold, with any reading above this deemed an expansion. Despite the reading of 49.8 in September improving from the 49.2 reading in August, the overall influence on the Australian dollar was a negative one. Dropping to intraday lows of 1.0325 against its US Counterpart earlier losses were well recovered overnight following a positive Manufacturing read in the US. On the outlook today attention will turn the Reserve Bank of Australia where it’s widely expected they will cut the official cash by 25 basis points to 3.25 percent which would signal the fifth downward adjustment over the past 11 months. Meanwhile this morning following a mixed 24 hour window the Aussie opens overall unchanged at 1.0363.
European stocks recorded three consecutive day of gains driven by optimism central banks from both sides of the Atlantic will opt for new stimulus initiatives to underpin growth.
We expect a range today of 1.0300 – 1.0400
New Zealand Dollar
In what’s proven to be a quiet start to the week for the New Zealand dollar a sustained move higher above the critical 83 US Cents mark appears unlikely in the short-term. Triggering some very small movements south for the higher yielding unit, official manufacturing PMI figures in China have once again increased speculation that the world’s second largest economy will struggle to achieve its annualised growth target of 7.5 percent this year. Despite brief lows of 0.8264 being witnessed against its US Counterpart, general risk sentiment over the past 24 hours has still favoured the Kiwi as the New Zealand dollar looks to broader equity markets as well as commodity prices for underlying direction for the day ahead. This morning sees the Kiwi currently buying 82.74 US Cents.
We expect a range today of 0.8230 – 0.8300
Great British Pound:
Whilst UK Stocks may have jumped the most in more than two weeks the same cannot be said for the Great British Pound which has struggled against its US Counterpart of late. Whilst European sovereign debt concerns have also eased over the past 24 hours the Sterling has generally struggled against a stronger Greenback which is finally starting to show signs of life. Dragging the Sterling lower overnight manufacturing activity shrank in September, signalling a hard road ahead as the UK economy remains in recession. Shedding around 20 basis from where we left it the Sterling opens weaker against the Greenback this morning at 1.6129.
We expect a range today of 1.5520 – 1.5600
The US Dollar is marginally stronger against a handful of the major currencies this morning well supported by a measure of US Manufacturing which comfortably beat the majority of forecasts. Residing fears of a potential US recession investors still remain concerned that the actions taken by the US Federal Reserve in the form of QE3 are only likely to have a minimum impact on underlying growth. With the actions of Central Banks once again likely to come into focus the market looks towards the RBA today ahead of the ECB, BOE and BOJ which all make rate and policy announcements this Thursday. Bouncing nicely from lows of 1.2803 against the Greenback the Euro received a boost overnight after reports indicated an increasing likelihood that Greece will receive their next aid payments despite their failure to meet budgetary conditions. Whilst stress tests across the Spanish Banking system also beat expectation, a stagnant unemployment rate which remained sticky at 11.3 percent for broader Europe wasn’t enough to drag down the shared unit which opens noticeably stronger this morning at 1.2888
Cash Rate, RBA Rate Statement
NZD: ANZ Commodity Prices m/m
Average Cash Earnings y/y
GBP: Nationwide HPI m/m, Halifax HPI m/m, Construction PMI
Total Vehicle Sales
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