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Strong manufacturing results boost Australian Dollar

Published: Wednesday 04 April 2018

  • AUD stronger on manufacturing data
  • US Dollar takes China’s trade tariffs in its stride
  • Manufacturing data awaited from UK and EU
​​By David Johnson

Strong manufacturing results boost Australian Dollar
I hope you had a fab Easter break. As we all come down from our sugar high, the week is already underway in other parts of the world – and the currency markets. We have already had a very strong manufacturing index from Australia, alongside the Reserve Bank of Australia’s (RBA) decision to leave their base interest rate on hold. That pushed the GBPAUD exchange rate down by a cent or thereabouts. The Australian retail sales data, due for release tonight, is also expected to be positive, so further AUD strength is highly likely overnight.

An eye for an eye…
Before that, China imposed significant import duties on a range of US goods including pork products and wine. The tit for tat is well underway in this, as well as in the Russian spy scandal.

Manufacturing results for EU and UK shock and delight
Today brings a number of manufacturing sentiment indices from a range of countries. The Eurozone results posted a surprise eight-month slowdown across all manufacturing sectors of 56.6 for March, although this still denotes growth overall, being above 50 on the Eurozone Manufacturing Purchasing Managers’ Index (PMI).
In contrast, the UK saw a steady growth rate for March, at 55.1, up from 55.0 in February, despite the gloomy forecasts. As ever, the strength of the UK manufacturing sector has been underestimated as political and economic uncertainty pervades. 

Big North American economic news expected later this week
The rest of the week does offer a smattering of data but the big ticket data releases are reserved for Friday. We will get the US employment data, which is forecast to be a little less positive than last month and we will see Canada’s employment report as well. That is forecast to be more upbeat than that from the US.
Friday also brings speeches from the Chairman of the US Federal Reserve and from the Governor of the Bank of England. All the markets will want to know from the new Fed Chair is when the next interest rate hike is due. I doubt he will be that clear; after all, none of his predecessors have been. BOE governor Carney has a tendency to weaken Sterling with every utterance, so be prepared for that potential.

April Fools
And the thing that struck me about this year’s round of April Fools jokes was that people are so ready to be outraged. A wildlife park announced that someone who looked a little like the Grinch had broken in and stolen the antlers off some of the deer in the park. It was accompanied by pictures of stags in the midst of shedding their antlers, as they do each year. Some had one antler still on and some were bare headed. The howls of affronted people who were disgusted by such animal cruelty were as verbose as they were ill informed. It seems thinking before complaining has become a thing of the past. It kind of offended me. It’s like against my human rights or summink, innit?
Did you hear about the guy who drowned in a vat of furniture varnish?
He had a horrible death but a lovely finish

Bad puns

I was hoping to steal some leftovers from the party.
I guess my plans were foiled.
Why did the balloon go near the needle?
He wanted to be a pop star.
I cannot stand insect puns. 
They bug the heck out of me.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 13:30 US: Final Gross Domestic Product 2.5% 2.7%
USD 13:30 US: Final Gross Domestic Product Price Index 2.3% 2.3%
USD 15:00 US: Pending Home Sales -4.7% 2.1%
NZD 22:45 New Zealand: Building Consents 0.2% 0.2%

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