Sterling had a bad day at the office on Wednesday. The Pound dropped against most other currencies but especially against the recovering US Dollar. Against the USD, Sterling dropped to a smidgeon above $1.38 at one point and it is only a quarter of a cent higher than that as I write. The USD was also making a nuisance of itself against the Euro; forcing the EURUSD rate down from $1.19 to $1.1835. This pair starts Thursday at $1.1850.
It is a public holiday in Hong Kong today and it will be in Canada too when they wake up. So the overnight market and the afternoon market (from a UK perspective) are lighter on trading volume than normal.
NZ manufacturing gain boosts NZD
Nevertheless, we did have some overnight action. A strong bounce in the Aig manufacturing index in New Zealand gave the Kiwi Dollar a bit of zipping. Having had another crack at NZD 1.9850 overnight, the GBPNZD rate is down to NZD 1.9750 this morning. That also matches the Pound’s poor showing elsewhere. I can’t help feeling the Kiwi Dollar would have gained more but for the 2.8% drop in building consents in the month to May. That is a very volatile piece of data though.
Mixed Tankan indices weaken JPY
We also had a mixed set of data in the Tankan report from Japan. The data was positive overall but the longer-term forecast elements were less encouraging. That allowed the Pound to buck the trend. Whilst Sterling has declined elsewhere, the GBPJPY rate rose more than one Yen to hit JPY153.80 overnight before s little profit-taking dropped it back 0.2 of a Yen.
Surprise PMIs before your very eyes
This morning we are awash with purchasing managers indices from across the eurozone. Of the ones we have seen so far, only the Swiss one was below expectations. Those from Germany, France, and the overall Eurozone manufacturing PMI were all better than forecast. The Euro hasn’t really reacted yet but we get EU unemployment data this morning too. So perhaps traders are keeping their powder dry for that.
The US will also release the manufacturing sector PMI this afternoon, along with the weekly jobless claims data. We are expecting a drop in initial claims, to below 400,000 this week. That would aid the ebullient USD.
The other one to watch for UK traders is a speech from Bank of England governor Bailey this evening. Be aware that the Pound could look very different tomorrow morning if Mr Bailey slips in any policy thoughts.
Pinch punch 1st day of the month and 1st day of the quarter and half year for that matter. It is an odd tradition but there are two potential reasons for the odd ‘pinch punch’ saying. It is attributed to a punch drink with a pinch of salt that was given to Native American people by George Washington at the start of each month and the earlier English story is that the pinch of salt was taken to protect against (punch away) witches. If your first words in the morning are ‘white rabbits’, (who are considered pure and deliver good luck), it protects you from all this nonsense. Thank goodness I’m not superstitious….touch wood.