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Bob Mason
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Earlier in the Day:

It was relatively busy Asian session on the data front this morning.

Australia’s AIG Manufacturing Index numbers and China’s Caixin Manufacturing PMI figures provided direction early on in the day.

The markets also responded further to the FED’s interest rate cut from Wednesday, which proved to be a more hawkish than anticipated rate cut.

For the Aussie Dollar

The AIG Manufacturing Index rose from 49.4 to 51.3 in July. According to the latest AIG report,

  • The return to expansion was attributed to building materials, wood, furniture & other manufacturers, with the sector PMI rising by 1.3 points to 63.7.
  • Textiles, clothing, footwear, paper & printing saw the heaviest loss on the month, with the PMI falling by 3.5 points to 39.1.
  • Looking at the sub-indexes,
    • The production sub-index fell by 3.6 points to 48.3, with the sales sub-index sliding by 8.1 points to 42.7.
    • New orders improved, with the sub-index rising by 3.2 points to 53.0. The employment sub-index also increased, rising by 3.1 points to 53.2.

The Aussie Dollar moved from $0.68451 to $0.68471 upon release of the figures, which preceded China’s PMI.

Out of China

China’s Caixin Manufacturing PMI rose from 49.4 to 49.9 in July, which was better than forecast.

According to the July Markit Caixin Survey,

  • The improvement in the sector was attributed to broad stabilization of output in the month. Total new orders saw a marginal increase, following a pullback in June.
  • Strong domestic demand supported the uptick in new orders, while new export orders were flat for the month.
  • A lack of upward momentum in new orders, however, led to a further reduction in headcounts.
  • Business confidence improved, following June’s slide to the lowest level on record, with confidence rising to a 3-month high.

The Aussie Dollar moved from $0.68423 to $0.68461 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.06% to $0.6849.


At the time of writing, the Japanese Yen was down by 0.38% to ¥109.19 against the U.S Dollar, while the Kiwi Dollar was down by 0.03% to $0.6557.


The Day Ahead:

For the EUR

It’s a relatively busy day ahead. Key stats due out of the Eurozone include Spain and Italy’s July manufacturing PMI numbers. Of less influence, barring material deviation from prelim numbers, are the finalized German and French manufacturing PMIs.

The Eurozone’s finalized manufacturing PMI will also need to be considered on the day.

At the time of writing, the EUR was down by 0.24% to $1.1049.

For the Pound

It’s a big day ahead for the Pound. On the economic data front, July manufacturing PMI will provide the Pound with direction. Forecasts are negative, which would weigh on the Pound ahead of the MPC monetary policy decision later in the day.

The MPC monetary policy decision is the key driver on the day. While the markets are expecting the BoE to hold on rates, the vote count and BoE Governor Carney’s speech will be of particular interest.

Expectations are for the BoE to talk of a near-term rate cut.

Brexit chatter will also influence on the day.

At the time of writing, the Pound was down by 0.25% to $1.2128.

Across the Pond

It’s a relatively busy day ahead for the Greenback. The Markit’s finalized July manufacturing PMI, the ISM Manufacturing PMI, and initial jobless claims figures are due out later today.

We would expect the ISM manufacturing PMI and initial jobless claims to have the greatest influence.

At the time of writing, the Dollar Spot Index was up by 0.29% to 98.804.

For the Loonie

There are no material stats due out of Canada later today, leaving the Loonie in the hands of market risk sentiment on the day.

The Loonie was down by 0.14% at C$1.3210, against the U.S Dollar, at the time of writing.

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