Market action over the next twenty four hours will depend largely on important manufacturing index updates from around the globe. After a benign, modestly pro-growth overnight session supported by better than forecast German inflation and US GDP growth there is potential for significantly higher volatility as traders and investors digest the data.

European investors boosted share markets. The exception was the UK, where the resignation of a junior minister sparked fears around further fracturing of the UK parliament and a disorderly Brexit process. The Pound slipped from recent highs. US shares finished slightly lower as caution around a US/China trade deal took hold. However oil and base metals rose in a pro-growth stance, and safe havens such as bonds, gold and the Japanese Yen slid.

The PMIs kicked off yesterday with the official China manufacturing read slipping to 49.2 from 49.5. This morning, two separate private Australian PMI releases moved in opposite direction, although both are firmly in expansion territory and may further support risk assets. Japanese and Chinese Caixin PMIs are released around mid-session and could be highly influential, especially if one or both move back towards expansion. Attention then shifts to French, British and Italian PMIs due tonight, ahead of US PCE data, the Federal Reserve’s preferred measure of inflation.

Despite the lift in commodities the AUD is trading below 71 US cents this morning. Asia Pacific stock futures are also constrained, possibly reflecting caution ahead of the data deluge.

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