Noticias
03 Sep 2015

Chinese manufacturing causes muted results

There was very much a risk-off tone to market sentiment on Tuesday. News of disappointing manufacturing data out of China, as well as some weaker than expected results from the US and European data releases, weighed heavily on risk appetite on Tuesday. Wednesday witnessed improving investor sentiment. Of the little action that did occur yesterday, the Euro came under pressure ahead of today's ECB meeting.

 

In level terms, EUR/USD traded in the $1.12-1.13 band, with some mild euro weakness edging the pair down towards the lower end of this range. A touch of euro weakness was also evident in EUR/ GBP, which traded down towards the 73p mark. Meanwhile, cable (GBP/USD) has slipped below the $1.53 mark, although the magnitude of moves was confined to a tight $1.527-1.531 range.

 

EUR/USD today - $1.12239, Monday $1.12216

  

GBP/USD today - $1.52882, Monday $1.53639

 

Currency fluctuations caused by Reserve movements

 

Currency reserves in the currently stand at $11.43 trillion. This figure has taken a steady decline through the past year as countries try to manage the actions of the Chinese economy, the Yuan devaluation and prepare for the Fed ultimate policy tightening.

 

Essentially this means that central banks are holding reserves to counter act money leaving a country or have no longer got to stash large amounts of money so they are beginning to use it instead. Whichever it is, the shrinking of reserves means much less money flowing into the financial system given authorities tended to recycle their cash piles into local currency or liquid assets such as bonds. Read more

 

Australian Dollar moves slightly

 

Yesterday the Australian dollar dipped below 70 US cents after reporting economic growth which was at a six year low and half of what was expected. However during trading it recovered to the 70.15 US cents mark by midday, Sydney time. Traders are pricing in about a 50-50 chance of a rate cut in November, though the weakening currency is likely to temper those expectations.

 

Figures showed that government spending increased by 2.2%, adding 0.4% to GDP. However the biggest slump was exports by 3.3% due to China’s weaken demand for commodities, which effect the economy (GDP) by 0.7%. Read more

 

Information for Today

  • UK services PMI for August
  • US services ISM for August 

 

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