Aussie dips to 21-month low
It was a bad start to a new month for the Aussie as a combination of a stronger dollar and weak data sent the antipodean currency to its lowest level versus the dollar since December 2016.
Retail sales were flat month-on-month in July, failing to match economists’ estimates of 0.3% growth, and this sent AUD/USD down to a low of 0.7166 and AUD/JPY down to a 22-month low of 79.526. The AUD did manage to rise in the AUD/NZD cross, simply because the kiwi performed even worse than the Aussie. There is growing speculation that the RBNZ may be ready to trim its benchmark rate at the next meeting, which is scheduled for September 27. AUD/NZD is now up 0.23% at 1.08875 following a near-term bounce off the 100-day moving average at 1.0859.
AUD/NZD Daily Chart
China’s Caixin PMI slides
The Caixin reading for China’s PMI slid in August, contrasting sharply with the official numbers published last Friday. The official numbers showed an increase to 51.3 from 51.2 but today’s reading, which focuses more on smaller, export-oriented firms, dipped to 50.6 from 50.8, as the trade tariff wars start to have an effect. The export order component of the index fell for a fifth month. The overall index held above the 50-mark for the 15th consecutive month, signaling expansion rather than contraction, it was the lowest reading since June 2017.
The pound trades defensively
At the weekend, UK PM Theresa May ruled out a second Brexit vote, saying it would be a “gross betrayal” of democracy. Meanwhile, the European Union’s chief Brexit negotiator Michel Barnier reportedly said he was strongly opposed to UK PM May’s proposals on future trade. This appears to be at odds with his comments last week where he said the EU was prepared to keep a “special arrangement” for the UK that no other country has. Obviously, it’s not going to be a “pushover-style” negotiation. GBP/USD slipped 0.28% to 1.29235, poised for a third straight daily loss, as the 55-day moving average and a downward-sloping trendline are considerable barriers to cross to the upside.
GBP/USD Daily Chart
US, Canada Labor Day holidays
Holidays in the US and Canada have ensured that the data calendar is relatively barren today. European highlights include Markit PMI readings from Germany, France, the Euro-zone and the UK with a speech from Fed’s Evans (dove, voter) mixed in-between.
The full MarketPulse data calendar can be viewed at: https://www.marketpulse.com/economic-events/
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