UD remained at the top of the currency leader board through European and North American trading today. Traders around the world responded positively to yesterday’s RBA decision which curtailed talk of additional support and unwound trades based on speculation of further easing.
Better than expected UK construction PMI and US manufacturing PMI provided further evidence of improving global economic conditions. This comes at a key time as there are seven central bank decision scheduled for this week. It appears that the pendulum of expectations has started to shift from expectations of further easing toward a more neutral stance where central banks may start to take their feet off the gas and coast even if they don’t hit the brakes just yet.
Other resource currencies have been gaining at a more moderate pace including CAD while GBP continues to strengthen off of improving UK economic performance. On the other hand, traditional defensives like JPY and CHF continue to weaken.
Commodity prices also continue to climb particularly crude oil and precious metals. While this appears to be mainly due at the moment to concerns that tensions in the Middle East (Egypt and Syria) could worsen and lead to supply disruptions, supply only really becomes an issue again because expectations of demand have started to rise which could underpin longer term trends.
Asia Pacific markets may remain active through today’s session with GDP data due for Australia and service PMI numbers due for countries across the region. The Nikkei remains active with traders speculating on Tokyo’s Olympic bid ahead of Saturday’s big vote due later this week. Singapore could see some activity following mixed data.
As the week progresses focus turns westward with European central bank meetings on Thursday and North American employment numbers on Friday.
Highlights of overnight announcements include:
Singapore electronics sector index 51.3 vs previous 50.3
Singapore PMI 50.5 vs previous 51.8
US ISM manuf PMI 55.7 vs street 54.0 vs previous 55.4
US construction spending 0.6% vs street 0.4%
US Markit PMI 53.1 vs previous 54.0
Canada manuf PMI 52.1 vs previous 52.0
UK construction PMI 59.1 vs street 56.9
Spain unemployment no change vs street 7.5K
The OECD made a number of changes to its growth forecast for key global economies, including:
US cut to 1.7% from 1.9%
Canada raised to 2.0% from 1.4%
UK raised to 1.5% from 0.8%
Germany raised to 0.7% from 0.4%
China cut to 7.4% from 7.8%
Japan remains at 1.6%
Upcoming significant announcements include:
11:30 am AEST Australia GDP street 2.4%
10:00 am BST Eurozone GDP street (0.7%)
10:00 am BST Eurozone retail sales street (0.3%)
7:30 am EDT US Challenger layoffs
8:30 am EDT US trade balance street ($38.6B)
8:30 am EDT Canada trade balance street ($0.2B)
10:00 am EDT Canada interest rate 1.00% no change expected
Service PMI releases include:
11:45 am AEST China HSBC previous 51.3
3:00 pm AEST India HSBC previous 47.9
8:15 am BST Spain street 49.5
8:45 am BST Italy
8:50 am BST France street 47.7
8:55 am BST Germany street 52.4
9:30 am BST UK street 59.7
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