The US$ is mixed at the end of Monday trade while stocks are flat and awaiting fresh inspiration. The concerns over the progress in the trade war, which heightened on Friday after a Chinese trade delegation announced an abrupt cancellation to a US farm visit last Friday, eased somewhat on Monday following a press report that the cancellation was done at the request of the US. The main action in the currency markets on Monday was in the Euro, which dived after the release of the release of the EU PMIs, which were generally awful. The Eurozone Manufacturing PMI dropped to 45.6 in September, down from 47.0 and missed expectation of 47.3, the lowest level in 83 months. The Services PMI dropped to 52.0, down from 53.5, also missing expectation of 53.3 and an 8-month low, while the Composite PMI dropped to 50.4, down from 51.9, a 75-month low. The German Manufacturing PMI dropped to 41.4 in September, down from 43.5 and missed expectation of 44.6, the lowest level since the GFC. The data suggests only minimal GDP growth in Q3 and it would seem that pressure will grow on the ECB to add to its recent stimulus package.
The main moves of the day were in the metals, which saw Gold up by 1% and Silver by 3.5%, driven higher by various geopolitical tensions, not least by the ongoing issues in the Middle East, the US/China, and today the dismal EU data, which suggests the possibility of a recession and the need for safe haven assets.
Tuesday will not have much to work with until the European session, when the German IFO Business Climate/Expectations (exp 94.5/91.9), BuBa Monthly Report and the UK August Public Sector Net Borrowing Requirements (exp Gbp 6.65 bio) will be the main focus. The RBA Governor, Lowe, will be speaking in the Australian evening to provide an “Economic Update”and traders will be watching him closely for any hint as to when to expect the next rate cut, possibly next week, which should ensure that the Aud$ remains heavy . The US session will have some secondary data, which will include the Case Shiller House Price Index (exp 2.2%yy), House Price Index (exp 0.3%mm), Consumer Confidence, Richmond Fed Mfg Index (exp -11) and the API Weekly Crude Oil Stock Inventory
Economic data highlights will include:
Tue: Nikkei Japan Mfg PMI, German IFO Business Climate/Expectations, BuBa Monthly Report, UK Public Sector Net Borrowing Requirements, CBI Distributive Trade Survey – Orders, RBA’s Lowe Speech, US Case Shiller House Price Index, House Price Index, Consumer Confidence, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory
Market moves, in brief:
FX: DXY 98.63 (+0.17%)
Bonds: US10Y; 1.723% (-0.94%), German 10Y; -0.581% (-11.61%), UK 10Y; 0.473% (-13.82%), Australian 10Y; 1.009% (-1.52%), NZ 10Y; 1.138% (-2.08 %), China 10Y; 3.105% (+0.29%)
Stock Indices: DJI; +0.06%, S+P; -0.01%, NASDAQ; -0.06%, EUStoxx50; -0.96%, FTSE100; -0.26%, Shanghai Composite; -0.98%,
Metals: Gold $1524 oz (+0.43%), Silver $18.66 oz (+3.7%), Copper $2.6165 lb (+0.38%), Iron Ore $93.49 per tonne (NYMEX) (+0.12%),
Oil: WTI $58.47 pb (+0.03%)
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