Intraday Market Thoughts

Cable Sinks, China Non-Manufacturing PMI

by Adam Button
Apr 3, 2013 0:09

The pound slumped the most in three weeks in a sustained flurry of selling. The New Zealand dollar was the best performer as it rose to a six-week high while cable lagged. The upcoming session features Australian trade data and Chinese services PMIs. 1 of 2 gold shorts hit all targets, EURUSD fell 1 pip short of our final 1.2880 target. USDCAD, USDJPY and EURGBP were stopped out. The first portion of a new Premium Insights will be issued during the Asian Wednesday session.

GBP/NZD was in focus on Tuesday as it fell more than 200 pips to a 36-year low. There wasn't a straight-forward answer for the strong moves in either currency but there was chatter about a large insurance payout from a UK insurer as a result of the New Zealand earthquake. That may have set off a flurry of activity and stops in both currencies.

The situation in Cyprus continues to look dire and a split from the Eurozone still can't be ruled out. The finance minister resigned amid investigations into suspicious transfers out of the country in the days leading up to the deposit levy. The government also agreed to austerity terms that include higher taxes, fees, privatizations and a hike in the VAT. If everything goes to plan, the bailout funds will be repaid in 22 years.

Gold sank following the Cyprus news, perhaps on diminished need for safety and perhaps on flows ahead of potentially strong US jobs numbers. The metal fell $24 to $1576 in the worst one-day decline in six weeks. The Feb low of $1555 is the next level of support.

The Bank of Japan begins its two day meeting with Kuroda's first decision as a potential watershed. In the meantime, the market will focus on Australian trade balance numbers for February. The consensus is for a $1 billion deficit after a similar number in January.

The focus then shifts to China for the official March non-manufacturing PMI at 0100 GMT. The prior reading was 54.5. At 0145 GMT, the services PMI from HSBC will give an independent look at the same sector.

Act Exp Prev GMT
Markit PMI Manufacturing (MAR)
48.3 48.5 47.9 Apr 02 8:28
PMI Construction (MAR)
47.5 46.8 Apr 03 8:30
ISM Non-Manufacturing PMI (MAR)
55.8 56.0 Apr 03 14:00
54.5 Apr 03 1:00
52.1 Apr 03 1:45
Spanish PMI Manufacturing
44.2 46.2 46.8 Apr 02 7:15
Markit PMI Manufacturing (MAR)
46.8 46.6 47.9 Apr 02 7:58

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