Slow start but UK PMIs early tomorrow

The fact that both New Zealand and Hong Kong having a national holiday today meant the overnight markets were fairly quiet. In fact, the rest of Monday is likely to be very quiet due to the lack of Tier 1 economic data due for release. Geopolitically speaking, the world is still on tenterhooks as Israel and Hamas mull their next moves. Interestingly, we haven’t seen the enormous strength of the US dollar that usually accompanies potential conflict expansion in the Middle East but that doesn’t mean we won’t see US dollar strength if either side escalates the conflict or other countries in the region fulfil their threats to attack Israel. 

Economically speaking, the data kicks off tomorrow with UK Purchasing Managers Indices. The markets are expecting a reduction in pessimism in all areas but there is no expectation of figures above 50, which would signify a degree of optimism in manufacturing and services. Tomorrow afternoon will also bring the service sector PMI for the US. By way of contrast, that is expected to show a slight reduction in optimism; maybe even a step down onto the pessimistic end of the scale. We start the week with the GBP/USD rate ticking slightly higher to £1.2160, the GBP/EUR rate marginally recovering to €1.1490 and the EUR/USD rate travelling sideways at $1.0590.

Australasian’s weak on China data

Both the Australian and New Zealand dollars have lost a little ground over the weekend, largely on the back of poor Chinese data, which hinted at reduced demand for Aussie and Kiwi exports. As we lack significant data from Australasia this week, there is no particular reason why these currencies should strengthen. However, sterling has made some gains which makes the AUD and the NZD attractive for UK buyers. At the interbank level, GBP/AUD is up to nearly AUD 1.93 this morning and the GBP/NZD rate is punching towards NZD 2.09 right now.