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Currency Market Analysis

Sep 04, 2019 | Currency Market Analysis

Global Themes

USD reverses as manufacturing slump hits

The US’s first day back after the Labor Day long weekend saw US shares, bond yields and US dollar all fall as market reacted to a sharp drop in the ISM manufacturing survey.

The ISM (Institute of Supply Managers) survey fell below 50 – a sign of economic contraction – and follows a similar result from the PMI (Purchasing Manager Index) last week.

The US dollar, as measured by the USD index, fall from two-year highs.

One-week highs

In other markets, the Australian dollar gained after the Aussie was helped by a better than expected current account result – the local economy produced its first current account surplus since 1975 – as booming iron ore exports provided support.

The GBP was lower as Brexit negotiations between the UK government and parliament saw the British pound flirt with 35-year lows versus the US dollar.

A bill to delay Brexit, due on 31 October, saw the UK government warn it would go to an early election if the bill was passed tomorrow.

Chinese data

The major release today comes from the Australian June-quarter economic growth numbers.

The market’s looking for 0.5% for the June quarter and 1.4% over the year. If these numbers are realised, it would be the worst annual result since the September quarter 2009.

Chinese Caixin services PMI is also released today. On Monday, the Caixin manufacturing numbers improved, a rare result as global activity numbers sputter.

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