- US Dollar weaker on fall in manufacturing confidence
- Reserve Bank of Australia sees no damage from higher base rate
By David Johnson
Well, if we are all being very honest with ourselves, Monday was a little dull, really. Sterling did manage to strengthen a little, moving up to $1.3150 and €1,1250, but the markets lacked dynamism because there was very little data to drive the buy and sell decisions.
US Dollar weakens on manufacturing disappointment
There were a couple of surprises, though; in the US data, which served to weaken the US Dollar to some extent. A sharp drop in the Empire State Manufacturing Index was unexpected. An index reading of 19.0 was in stark contrast to last month’s 25.6 and well below forecasts. This is still in positive territory but the index had been trending higher since February and this was a big step back.
Canadian Dollar sellers beware
The other surprise was a sharp rise in funds flowing into Canadian treasury certificates from overseas. This is generally seen as a sign of safe-haven buying by investors and I guess that should have been expected, what with the US’s aggressive trade policies towards… well, everyone, really. The funds tend to flow into the US treasuries faster than elsewhere and we will see the American figures today, so that is certainly one to watch. We will also get Canada’s manufacturing sales data and that is expected to be poorer than last month, so watch out if you are a Canadian Dollar seller.
Boost for Australian Dollar
Overnight, we saw a smaller than expected drop in Australian house prices. The figure was minus 0.7 percent; matching last month’s number. The markets had anticipated a much larger fall, so this is a positive… of sorts, for the Australian Dollar. The Aussie Dollar was also boosted by comments within the minutes of the last RBA meeting, which suggest they may raise interest rates, in spite of these poor house price statistics. The Reserve Bank downplayed the impact of a rate hike on the housing market, saying the cost of borrowing is still lower than this time last year.
Later on, we will get the New Zealand Consumer Sentiment Index, and we are expecting a small dip, but the number is likely to remain in optimistic terrain.
Have a great Tuesday, everyone. It’s nearly Wednesday and that’s half way through the week. So Tuesday is great. Honest.