The political tensions in Spain/Catalonia placed early pressure on the Euro on Monday from which it never recovered as the US$ began to make some cross-board gains, although the weakest currency of the day was Sterling, which weakened sharply, pressured by weaker than expected manufacturing data and placed some doubt as to whether the BOE will be able to raise rates in the coming months. Today’s UK Construction PMI will be closely watched. Elsewhere gold extended recent fall while WTI also fell sharply due to signs of an uptick in crude output as data showed OPEC oil output rose last month while an increase in U.S. drilling activity pointed to rising domestic production. US Stocks made yet new all time highs underpinned generally by hopes that President Donald Trump’s tax reform plan, and more specifically by some solid US data, with the ISM Mfg and Prices Paid and Construction Spending data all beating expectations.
There is not a whole lot going on, on Tuesday, although the day begins with the NZIER Business Confidence (Q3) and will be closely followed by the Australian Building Permits and the RBA Interest Rate Decision. No change is unanimously expected and the Statement will be closely watched for any sign of divergence from the recent bland announcements. It does not look as though there will be any hawkish bias, with the RBA seemingly not concerned by the other central banks hinting at tighter policy down the track, so I don’t think we should expect too much from today’s outlook. The UK Financial Policy Statement and Construction PMI and the EU PPI will be the European highlights ahead of the US session when The Fed’s Powell will be speaking, while the data highlights will be the NY ISM Business Conditions and the Total Vehicle Sales for August. The API Weekly Crude Oil Stock Inventory are also due, and Kiwi traders will want to look out for the Global Dairy Trade Index at around midday – London.
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