RBA keeps it tight

Nov 04, 7:31 am
Reserve Bank of Australia_Orbex

On Monday, China’s Caixin PMI (Purchasing Managers Index) came at 48.3 for the month of October, versus and expected 47.5 and a previous 47.2 posting. Whilst reports from the previous eight months have been of a constant economic decline, the latest deterioration is the weakest in five months.

Markit reports over the month of October show a substantial growth in UK’s manufacturing sector, marking the steepest climb since June 2014 and also a positive shift from the subdued trend in the most part of the current year. The seasonally adjusted Markit/CIPS PMI has risen at 55.5 16-month high, over September’s upwardly revised 51.8.

In the US, the Institute of Supply Management (ISM) released the manufacturing indicator showing a stall for October, as a direct impact of the weak global demand. The indicator printed 50.1, 0.1 above the expected 50.0, but under the 50.2 September reading. It is worth mentioning that this represents the lowest value recorded since October, 2013 for this particular indicator. ISM’s employment gauge went down to 47.6 in October from September’s 50.5 and marking the weakest figure disclosed since August, 2009.

The export indicator showed an improvement from 46.5 to 47.5, but still under the 50.0 threshold for the fifth consecutive month.

Tuesday brought the RBA’s (Reserve Bank of Australia) decision over maintaining the rates of Australia’s monetary policy at the current value, sending the Aussie up to 0.72 but only to quickly retrace at the 0.7127 daily low, but recover towards the 0.7170 area. In other words, the AUD/USD registered a 40 pips swing on both sides as a consequence of RBA’s decision, future easing prospects remaining as inflation maintains low values.

On the UK side, there was another important release yesterday in the form of the Construction PMI. As per the latest report, the index missed its estimations coming out in October at 58.8, under the estimated 58.9 reading. Also, the figure came lower than September’s, the previous month posting being at 59.9 – 1.1 higher.

On another positive note, black gold prices are recovering smoothly. Yesterday, the advance maintained around the upper bound of the daily high in the $47.40/barrel area. US’s WTI (West Texas Intermediate) barrel is trading with a reinforced confidence although market chatter about a so-called “technical rebound” is blooming here and there. Concerns of a supply glut still darken the horizon for the crude oil, wrapping and knocking back occasional bullish attempts.

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