Expected Range 1.3180 to 1.33300
Yesterday afternoon we had the latest insight into the state of the US manufacturing sector in the form of July’s ISM manufacturing PMI. The report showed that the pace of the manufacturing sector had slowed slightly and confirmed that the nation’s builders have been hit by the fall in spending. There was a 5.4% fall in public spending on building projects which arguably is a consequence of President Trump’s inability to pass any infrastructure spending legislation, or indeed any legislation at all.
In contrast, UK factories have grown as a result of a surge in exports. The foreign demand for UK goods has grown at its fastest rate since April 2010 and is a direct consequence of the weak pound. GBP/USD held above 1.32 (IB) as a result. Today will see the release of UK construction PMI, whilst over in the US this week’s job data kicks off in the form of the ADP employment report. Despite the recent weakness in inflation, full employment is still a little way off and the market expects around 190k people to have been added to the payroll.
Expected Range 1.1130 to 1.1210
It was another great day for Eurozone data yesterday as growth figures and manufacturing reports showed the Eurozone area is going from strength to strength. GDP figures showed that the Eurozone grew twice as fast as the UK in Q2 at 0.6% and up from 0.5% in Q1. To reiterate this, the economy has now expanded for 17 consecutive quarters and unemployment is at a nine year low, albeit still sitting at 9.1%. As this report referenced recently, the political uncertainty for the EZ at the start of the year has certainly fallen through and the euro is driven by streams of strong data and ECB anticipation. EUR/USD is holding above 1.18 (IB) and GBP/EUR is struggling around the 1.11 (IB) mark.
Expected Range 1.6420 to 1.66620
It was a quiet day yesterday for the Aussie dollar, with only building approval data showing a big jump up to 10.9% in June, from May’s figure of -5.4%. Following the RBA’s rate statement, GBP/AUD is trading around the 1.65 (IB) level.
New Zealand Dollar
Expected Range 1.7675to 1.7800
However the jobs data released from New Zealand overnight was much more significant. New Zealand labour reports are only released every 3 months unlike the monthly reports elsewhere. Whilst unemployment fell for Q2 job growth also dropped to -0.2%. Unemployment is at its lowest levels since the end of 2008. As a result there has been a reassessment of when the RBNZ could hike their interest rates and the market consensus has pushed this back to February 2019 from November 2018. GBP/NZD has gained over a cent overnight.