Intraday Market Thoughts

Ahead of US Manufacturing ISM

by Patrik Urban
Sep 4, 2012 12:38

RBA kept rates at 3.5%; UK construction PMI lower; Swiss GDP disappointed; Eurozone PPI rose; Periphery yield curves steeper. Markets await ISM manufacturing. The link to Ashrafs Thursday webinar is below.

The greenback is marginally stronger across the board in the ongoing session except JPY. European equities are slightly weaker.

AUDUSD moved higher to 1.0287 after the RBA left rates steady at 3.5% in line with expectations. The accompanying statement did not surprise either as the RBA continues in its wait and see approach. The currency subsequently lost its gains and fell back to 1.0240.

UK construction PMI fell back below the 50 level in August and printed 49.0 from 50.9. The sector recorded the sharpest decline in new orders since 4/2009 and the commercial activity dropped for the first time in over two years. GBPUSD failed at the 1.59 level and currently trades around 1.5870.

Swiss Q2 GDP disappointed as it came in well below expectations. The economy contracted 0.1% after previous growth 0.5% q/q and slowed to 0.5% from 1.2% y/y.

Eurozone PPI rose 0.4% in July from previous 0.5% decline m/m while the annual print remained unchanged at 1.8%. Higher energy prices contributed the most to the increase.

Periphery yield curves are steepening amid speculation that the ECB will on Thursday present a framework that would help to push down the funding costs of Spain and Italy. 2 year Spanish and Italian notes are sharply lower losing nearly 8.6% and 7% respectively. They trade around 3.21% and 2.40%.

US reports are limited to ISM manufacturing due at 10:00 am ET that is expected to rise slightly in August to 50.0 from previous 49.8.

Details of Ashrafs Thursday Webinar


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