USD stalled by oil disparity

Monday was a day of strong purchasing managers surveys. The UK manufacturing PMI was slighter more optimistic than expected at 57.8 and the US data was very positive; especially the manufacturing prices index, which was the fifth-highest since 2008. That inflationary pressure hasn’t manifested itself in a stronger US Dollar though.

OPEC members are rejecting calls for more oil production made by US President Biden in his bid to bring down petrol (gasoline) prices. That may strike you as a mixed message when the US President is at COP26 where calls are being made for fewer carbon fuels to be used…but I couldn’t possibly comment. Either way, when combined with a 0.5% drop in US construction spending in September, it has halted the rise of the USD. GBPUSD is stable around $1.3650 but the EURUSD rate has gained 3/4 of a cent since Friday to $1.1605.

If you spotted the disparity in those numbers, you won’t be surprised to see the GBPEUR rate down to €1.1765, Having failed to break through the €1.19 level last week.

RBA on hold but change focus

The Reserve Bank of Australia left their base rate on hold at 0.1% as expected when they met earlier this morning. Interestingly though, the RBA has changed its focus on monetary policy. They had been watching and attempting to control the yield on three-year bonds. That policy has come to an end and traders appear not to have liked the decision. The GBPAUD rate shot up to nearly AUD 1.83 before settling back to AUD 1.8277 at the time of writing.

Today’s data diary is a slim one. There are more PMIs from the eurozone and the US and we’ll get Canada’s building permits data. That is unlikely to shift the GBPCAD rate out of its CAD 1.6880 to 1.70 range though.

Things heat up overnight, (as far as the UK is concerned). Australia will release the service sector PMI and a construction sector sentiment index. Both could be influential, especially after the RBA’s change of emphasis.

NZD will be volatile overnight

The big mover overnight will be the New Zealand Dollar though. We will see RBNZ financial stability report before NZ unemployment data, which ought to reflect a drop in the unemployment rate to 3.9% or maybe lower. The wages data is expected to reflect the rising inflation seen elsewhere, so that’s something for the Reserve Bank of New Zealand to ponder. And that’s handy because the Governor of the RBNZ, Adrian Orr will give a speech later tonight. It is widely felt that the RBNZ will start tightening monetary policy soon. So we will be looking for cues on that in his words. Whether you are a buyer or seller of kiwi Dollars, you may wish to use the expected volatility to place an automated order overnight tonight.

And I saw a quote this morning that made me laugh, Facebook is like having a load of nosey neighbours who don’t speak to you much but like to peek over your fence to see what you’re up to and who you are with. That pretty much sums up social media, I think.

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