Daily Alert: Tuesday 4th October 2016

Mark NugentDaily Alert, Oct 2016

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Forex Analysis for Tuesday 4th October 2016
Economic Calendar

Monday: UK Manufacturing PMI beat expectations (55.4 vs 52.1). US ISM Manufacturing PMI did likewise (51.5 vs 50.4). The Fed’s Mester said the case for a rate hike in December will likely be strong.

Tuesday: Early this morning the RBA kept rates unchanged at 1.50%. The statement noted that the current rate is consistent with sustainable growth. Inflation to remain low for some time. RBA also stated that the strong AUD may complicate matters.

Also this morning, BoJ’s Kuroda said that negative interest rates are good for the economy but he will consider the profitability of banks when making policy.

Market Reaction

US equities remain at or near all-time highs. UK gaps down and rises. Oil climbs towards USD48.5/barrel, near short-term support. The USD is strong and JPY is weakening. The GBP drops to support. The AUD continues to rise and the NZD returns to an upwards trajectory. The sentiment is definitely risk-on. The Fedwatch tool now says a 62% chance of a rate hike in December.

Media

Foreign FTSE investors suffering because of weak pound despite index approaching all-time high. Iran investing massively in new oil reserves. IMF meeting in Washington as global growth proving elusive and peasants revolting all over the world at perceived iniquities of globalisation.

Today

Later today we have UK Construction PMI and in New Zealand we see the biweekly Global Dairy Trade pricing.

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