Europe Seen Higher After Record Highs in US

European equity markets are expected to open a little higher on Tuesday, buoyed by decent gains in Asia overnight and new record highs in the US on Monday.

AUD Slips as RBA Maintains Neutral Stance

The Reserve Bank of Australia left its cash rate on hold at 1.5% overnight and released a relatively neutral statement alongside it that praised certain elements of the global and domestic economy while once again warning about the detrimental effects of a strong Australian dollar.

Oil’s Drop Is No Barrel Of Fun

The statement gave no indication that the RBA is preparing to raise or cut interest rates any time soon, with upside and downside risks aplenty providing the central bank little incentive to do so. The Aussie dollar fell a little after the release to trade below 0.78 against the dollar, back to levels last seen in mid-July.

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Spanish Unemployment and UK Construction eyed

While political distractions will likely continue to tick over in the background – this week’s primary focus being the aftermath of the Catalonia referendum – this week is more about the economic data given the sheer volume of numbers being released. Spanish unemployment is up first today, with the data expected to show a second consecutive monthly increase, this time of 21,300. Given the general improvement in the labour market in recent years and the tendency of unemployment to rise at this time of year, I don’t think anyone will be too concerned by the data.

Construction becomes the latest sector in the UK to come under the microscope when the PMI survey for September is released this morning. Monday’s manufacturing PMI fell a little short of expectations but remained comfortably in growth territory, supported by the weaker pound, despite its recent recovery. The construction PMI is expected to remain unchanged at 51.1, having slipped back here after a summer of much more optimistic readings. The most important of the UK PMIs comes tomorrow though, with the services sector representing more than three quarters of economic output.

Sombre Start

Potential Future Fed Chair Makes an Appearance

While there’s no US economic data being released today, we will hear from Jerome Powell who currently sits on the board of governors at the FOMC but is also one of the four candidates currently being considered for Chair of Federal Reserve once Janet Yellen’s term ends in February.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.