Better than forecast US numbers failed to support share markets overnight. Instead, the USD surged and defensive stocks fell as investors drew a straight line to higher US interest rates. Initial weakness may be tempered by the release of local numbers this morning and an RBA decision this afternoon.

A quieter and more positive European session saw Deutsche Bank shares stabilise despite attempts in some quarters to turn an ATM glitch into a liquidity crisis. Stable industrial metals and rising oil prices tracked shares higher as sentiment improved. In the US manufacturing and new orders both surprised to the good but the resurgent USD brought investor caution. Utilities were hardest hit as investors trimmed interest rate exposed assets, and gold slumped. Other defensive sectors such as property and consumer staples may feel the downdraft today.

The note of caution should see a weaker open in Australia today. Building approvals for August are expected to drop after the surprising lift in July. Nonetheless the annual rate of approvals is forecast to lift from 3.1% to over 5%, a potential source of investor confidence. Analysts believe there is almost no chance of a change from the RBA today. New Governor Lowe is likely to show continuity with the approach of his predecessor, demonstrating a safe transition and a stable monetary environment.

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