- RBA keeps official rates on hold
- ECB meets for stimulus decision on Thursday
- Strong UK services data rebounds in August
UK recession fears have been eased after UK services rebounded strongly. The index rose from 47.4 to 52.9 in August which pushes very nicely above 50 and therefore suggests the UK is not spiralling into another recession. The stellar services figure which accounts for 80% of the UK economy, will have invariably of also had a positive influence on UK manufacturing and construction.
There had been fears of two consecutive quarters of falls in economic growth which is the usual definition of a recession however Chris Williamson, chief economist at Markit, said the survey findings suggested there would be a modest 0.1% expansion in GDP in the three months to September.
The Australian Dollar was the best performer overnight after RBA held their official base rate at 1.5%. While this was widely expected, markets were keeping an eye out for any change in sentiment embedded in the accompanying statement. In fact, the RBA's statement was identical to August's release and no new information was revealed.
The central bank also maintained a neutral stance and noted that "taking account of the available information, and having eased monetary policy at its May and August meetings. The Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."
The Euro has struggled a little so far this week as markets prepare for the ECB policy decision on Thursday. Expectations are divided on whether the central bank will announce additional stimulus.
It is believed as a minimum; policymakers would review the bond-buy options and possibly tweak the programme. The catalyst for this speculation is due to concerns of a lack of bonds currently available for purchase in the market.
Focus today will be ISM manufacturing data and then a UK inflation report hearing will be closely watched tomorrow.
As I have always said; “There are three types of people in this world… Those who can count and those who can’t”.
A lawyer returns to the parking lot to find his sports car with the headlights broken and considerable damage to the front end.
There's no sign of the offending vehicle but he's relieved to see that there's a note stuck under the windshield wiper: "Sorry, I just backed into your car. The witnesses, who saw the accident are nodding and smiling at me because they think I'm leaving my name, address and phone number. But I'm not."
Today's Major Economic Releases
||EU: Retail PMI
||EU: Revised GDP q/q
||US: ISM non-manufacturing PMI
||US: Labor market conditions index m/m
||New Zealand: Manufacturing sales q/q
FX Research and Daily Currency Analysis by Michael Hart
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