Australian Dollar:
The Australian dollar climbed higher to begin the week shrugging aside local data which missed the mark and taking on forecast Chinese numbers in a positive light. China’s manufacturing PMI and HSBC Final Manufacturing was shown to be expanding. Even though the expansion was slower than anticipated an increase nonetheless is a welcome sign for China’s economy as Australia’s largest trading partner. Australian company operating profits were down for the quarter more than expected largely driven by the fall in the mining sector however the market chose to ignore the data and the AUD continued to gain. Although there was movement the Aussie traded in a fairly tight range partly due to Labour Day in the United States and the Reserve Bank of Australia’s interest rate decision looming this afternoon. Most economists are tipping rates to remain on hold as Policy makers reinforce their neutral stance although some are calling for a rate cut amidst the resilient Australian dollar. The AUD opens this morning stronger buying 93.33 US cents.
- We expect a range today of 0.9290 – 0.9370
New Zealand Dollar:
The New Zealand dollar followed its cross Tasman counterpart higher to begin the week underpinned by expansionary Chinese manufacturing data and a positive overseas trade index released locally. The overseas trade index was released first and came in ahead of forecast showing the price of internationally traded foods and services increasing by 0.3 per cent. Later on the Kiwi welcomed Chinese data which showed growth in their economy and even though the development was not as large as expected this is still a positive sign as investors were witnessing China, one of New Zealand’s largest trading partner exhibiting a contraction at the beginning of the year. With no data out locally today the markets will turn to US ISM manufacturing numbers for guidance. The NZD opens stronger this morning at 83.78US cents.
- We expect a range today of 0.8335 – 0.8415
Great British Pound:
In a similar move to most major currencies the Great British Pound moved higher against the Greenback in subdued trade however the gains were limited as UK manufacturing grew at its lowest rate in over a year. On a positive note lending to individuals for the month was up and mortgage approvals remained steady. The Sterling lost ground against the AUD(1.7790) and NZD(1.9820) after expansionary Chinese data boosted the higher yielding currencies. All eyes this afternoon will focus on UK Construction numbers which is a strong indicator of economic health while investors will continue to monitor the situation in the Ukraine which could eventuate with new stronger sanctions placed on Russia.
- We expect a range today of 1.7750 – 1.7830
Majors:
With a bank holiday for Labour Day in the US market movements were anticipated to be dull and as expected most currencies traded in a fairly tight range. The Euro opens this morning flat against the US dollar however sentiment towards the down side is prevalent given the growing worries over the Ukraine crisis and the impending possibility of quantitative easing being implemented by the European Central Bank. The situation in the Ukraine appears to be dragging on and there are talks over further sanctions being placed on Russia by the EU. Putting additional pressure on an already struggling Euro, Russia is one of their largest trading partners. In European trade, another poor release overnight showed the manufacturing sector is struggling, specifically in two power houses, Spain and Italy. These numbers are important given the Eurozone is on the cusp of implementing additional stimulus measures to try and give their economy a boost towards recovery and they could help give investors clues as to a timeframe. With the US markets opening this morning all eyes will turn to the Manufacturing numbers released to give direction for the week to come.
Data releases:
- AUD: Building Approvals m/m, Current Account, Cash Rate, RBA Rate Statement
- NZD: ANZ Commodity Prices m/m
- JPY: Monetary Base y/y, Average Cash Earnings y/y, 10-y Bond Auction
- GBP: Construction PMI
- EUR: Spanish Unemployment Change, PPI m/m
- USD: Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending m/m, IBD/TIPP Economic Optimism, ISM Manufacturing Prices
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