Euro supported by Sentix survey

The Sentix Economic Index for the eurozone improved marginally to -18.6 in October. The Economic Expectations component of that delivered an increase of 6.8 points. These are improved numbers but still well into negative territory. So the euro did stabilise but not strengthen particularly. German factory orders also improved, but this morning’s German Industrial Production Data was much worse than expected at minus 1.4% in the month to October. The markets had forecast a minimal 0.1% decline. The euro lost a little ground to the USD. The EUR/USD rate starts Tuesday around $1.07; half a cent down on yesterday’s highs. The GBP/EUR rate is also half a cent lower at €1.1510. other than a couple of central bankers speaking on behalf of the ECB, there is nothing substantive from the eurozone today. So some range trading is likely.

RBA follows the script with rate hike

The Reserve Bank of Australia delivered the expected 25 basis point interest rate hike overnight. That brings the base rate up to 4.35%, the highest level in roughly 12 years. The RBA is clearly committed to bringing inflation down to its target level of 2.0%. However, with the current level standing at 5.4%, there is some way to go in that pursuit. The flip side to the coin is the damage these high interest rates are doing to consumers and businesses alike. Hence, the GBP/AUD rate actually rose after the announcement. This pair starts the day in the UK at AUD 1.9160, more than a cent and a half up from yesterday. There may be more upside to this rate in the next 24 hours. The Aussie building approvals data, due tomorrow morning, is forecast to be significantly worse than last month’s 7.0% growth. Some are forecasting a 5% contraction.