GBPUSD rate is struggling to remain above $1.51

I write whilst still laughing at an image I encountered whilst stuck in traffic this morning alongside Clapham Common. There were plenty of the usual morning joggers around; all Lycra and headphones but one woman caught my eye. She jogged quite sedately in the park alongside the road and when she reached the railing separating the park from the pavement, she sat down on the tubular railing, reached into her bum-bag and pulled out her cigarettes before lighting up and sitting there smoking. I love a bit of irony first thing in the morning.

Monday was a quiet one really. We did have service sector Purchasing Managers Indices from the UK and US but both were poorer than expected. I guess that is in keeping with the generally downbeat nature of recent data in the wake of the slowdown in China and its consequential effect on share prices around the globe.

Overnight we heard from the Reserve Bank of Australia and they left their base rate on hold at 2.0% and made almost no revisions to their previous statement. This is the 5th month of unchanged rates and the base rate sits at a record low. Oddly, the RBA made almost no mention of the greatest challenge to the Aussie economy; China. There is a strong probability that the Australian base rate will remain at this record low for a year or more and it may even dip if the China slowdown becomes more pronounced. That will keep the Aussie Dollar on the back foot but any pick up in commodity markets will strengthen the AUD to a greater or lesser degree.

The aforementioned Chinese slowdown had caused a slump in commodity prices and, as commodities are almost universally traded in US Dollars, the weaker base price has allowed the US Dollar to strengthen. The Euro - US Dollar rate is back in the €1.12 range and the Sterling - US Dollar rate is struggling to remain above $1.51. There is practically no UK data today but we do get the US trade balance at 13:30 UK time. That is forecast to have widened again but it is always dreadful so we ought not expect any major change in the markets.

EU data is also thin on the ground. We had the German factory orders data. This was the August performance; before the Volkswagen news broke but after the news of the Chinese slowdown started to impact. The 1.8% decline was better than the previous month's minus 2.2% but the real dread is what will happen in the September and October figures, which will reflect the post-VW-fraud effects. Awkward.

This afternoon brings Canada's international trade statistics and the Ivey purchasing managers' index. The fall in commodity prices and demand has hit the Canadian Dollar as it has the currencies of all commodity exporters. However, the slide in the value of the Pound over the past few weeks has allowed the Canadian Dollar to push back below C$2.0 against the Pound and there is probably scope for two or three cents of further decline. If you are a CAD seller, it looks like this is your moment.

In other news, President Obama is pressing to get US gun laws changed but faces fierce resistance from the pro-gun lobbyists. The statistics put it into context though. Last year in America, 11,208 people died from gunshot wounds and 84,258 received non-fatal injuries. 2,996 people died as a result of the September 11th attacks in 2001 and that is quite understandably commemorated each year with each name being read out in at ground zero. As they say in America, go figure.