Currency Market Analysis

Oct 02, 2019 | Currency Market Analysis

Global Themes

Safe-haven USD lifted by manufacturing crash

Financial markets lifted the US dollar overnight as they reacted to a crash in US manufacturing activity with the ISM manufacturing index falling to the lowest level in a decade.

The fall, to 47.8 from 50.4 last month, indicates the US manufacturing sector has fallen into contraction.

The US dollar gained with the USDSGD jumping 0.3% to the highest level in one month.

AUD at ten-year lows

The AUD plunged to the lowest level in over ten years yesterday after the Reserve Bank of Australia cut official interest rates to a historic low of 0.75%.

Importantly, the RBA shifted its language to signal it expected to keep interest rates at very low levels for an extended period of time.

The RBA said: “It is reasonable to expect that an extended period of low interest rates will

be required in Australia to reach full employment and achieve the inflation target.”

By saying that it expects to keep rates low until full employment is met, the RBA is signalling that local rates will stay low for the foreseeable future.

Jobs in focus

After last night’s poor US data, the focus remains on the US economy with the ADP jobs reading due at 8.15pm tonight.

The report is seen as an important guide ahead of Friday’s all-important US non-farm payrolls.

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