United States Dollar: It was a solid start to the week for the pound as the monthly Manufacturing PMI slightly beat expectations yesterday printing 53.0 slightly up from last month’s 52.7 and better than the 52.9 forecast. The report cited the sector had benefitted from the sharpest fall in input costs since 2009 as the price of oil and commodities fell. The sector has now expanded for 23 consecutive months however the past six months have seen the pace of growth moderate due to resumption of the Eurozone crisis and a strong GBP/EUR rate. Yesterday afternoon saw the ISM Manufacturing PMI from the States print 53.5 slightly lower than expected however this was still the 20th consecutive month of expansion. GBP/USD peaked at 1.5075 in the immediate aftermath of the UKs PMI reading but fell away to find support at 1.5005 as the day went on. This morning we open at 1.5016 after briefly dipping under 1.50 before the London session started. Today sees UK Construction PMI with a reading of 56.9 expected.
We expect a range today in the GBP/USD rate of 1.4950 to 1.5075
Euro: Spanish and Italian Manufacturing PMIs released yesterday saw slightly better results than expected however Italy’s reading of 49.9 was the fourth reading in a row below 50, the level which divides expansion and contraction. GBP/EUR moved between 1.3320 and 1.3230 throughout yesterday and currently trades at 1.3252. It’s been a relatively quiet start to the week data-wise for the Eurozone however tomorrow sees Retail Sales figures and Thursday brings German Factory Orders and the latest EU Economic forecasts which may predict a further slowdown in the Eurozone economy for 2015. EUR/USD is at 1.1322.
We expect a range today in the GBP/EUR rate of 1.3230 to 1.3310
Aussie and Kiwi Dollars: Overnight has seen the Aussie collapse as RBA Governor Glenn Stevens announced the first interest rate cut in Australia for 18 months. The headline Cash Rate was cut from 2.5% to 2.25% an all-time low. The accompanying statement cited under-par growth, subdued domestic demand and rising unemployment as headwinds facing the economy. The cut wasn’t out of the blue (like Canada’s rate cut last month) however it seems it wasn’t fully priced in for this meeting. It appears more cuts may be on the horizon as well with Governor Stevens statement saying the Aussie “remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.” AUD/USD dropped to a six-year low in on the back of the release to trade as low as .7626. It currently sits at .7665. GBP/AUD peaked at 1.9680 overnight and currently trades at 1.9586. The Kiwi mirrored the Aussies drop falling from .73 to a low of .7183 against the dollar. Tonight sees employment data from New Zealand with RBNZ Governor Graeme Wheeler speaking in Christchurch. We also have the latest Global Dairy Trade Index figures. GBP/NZD trades at 2.0838 after briefly breaking through 2.09.
We expect a range today in the GBP/AUD rate of 1.95 to 1.9680
We expect a range today in the GBP/NZD rate of 2.0780 to 2.0935
AUD: No data
EUR: No data
GBP: Construction PMI
NZD: GDT Price Index; Employment Change q/q; Unemployment Rate; RBNZ Governor Wheeler Speaks
USD: Factory Orders m/m
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