Forex Afternoon Wrap – 01/06

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Mixed US Dollar ahead of a data packed week!

Key Notes:

  • Australia AIG Manufacturing index 52.3 vs. 48 previously
  • Japan, capital spending q/y 7.3% vs. -0.1%
  • Australia MI inflation gauge m/m 0.3% vs. 0.3% previously
  • China Manufacturing PMI 50.2 vs. 50.2; non-manufacturing PMI 53.2 vs. 53.4 previously
  • Australia building approvals m/m -4.4% vs. -1.7%
  • Japan final manufacturing PMI 49.2 vs. 49.2
  • China HSBC final manufacturing PMMI 49.2 vs. 49.2
  • Australia commodity prices y/y -19.5% vs. -20.7%
  • Spain manufacturing PI 55.8 vs. 54.4
  • Switzerland manufacturing PMI 49.4 vs. 47.2
  • Italy manufacturing PMI 54.8 vs. 53.1
  • Germany prelim CPI m/m 0.1% vs. 0.0%
  • France final manufacturing PMI 49.4 vs. 49.3
  • Germany final manufacturing PMI 51.1 vs. 51.4
  • Eurozone final manufacturing PMI 52.2 vs. 52.3
  • UK manufacturing PMI 52 vs. 52.7
  • US Core PCE price index m/m 0.1% vs. 0.2%
  • US personal spending m/m 0% vs. 0.2%; personal income m/m 0.4% vs. 0.3%

Later:

  • Final manufacturing PMI
  • Construction spending
  • ISM manufacturing prices

The Asian markets kicked off with a busy economic calendar from Japan, China and Australia. AIG manufacturing index rose to 52.3 from 48 last month while inflation gauge remained unchanged for the month compared to last year. However, there was a sharp decline in building approvals which dropped -4.4% as the RBA cited concerns of the rising bubble in the housing markets and sought measures to cool the sector, the effects of which are starting to show. The Aussie dollar was however subdued, trading close to 0.765 levels. The Kiwi dollar, after seeing a sharp decline last week saw a bullish price action as the currency managed to trim its losses from the lows at 0.71. The Aussie and Kiwi were however muted to a mixed economic data from China.

From Japan, the final manufacturing PMI met estimates, at 49.2 while capital spending managed to rise 7.3% beating estimates. The Yen was relatively stronger at the start of the Asian session with the USDJPY stalling near the 124 region.

Across Europe, manufacturing PMI data from Spain, France and Italy managed to print mostly positive numbers. The Eurozone overall manufacturing PMI posted a modest print at 52.2. Germany’s preliminary CPI data managed to beat estimates rising 0.1% for the month. The Euro was however trading weaker into the US trading session after hitting session lows of 1.089 before managing to rally higher to trade near 1.0948 at the time of writing.

UK’s manufacturing PMI was soft at 52 but the Pound Sterling was weaker after posting sessions lows near 1.5209 before managing to trim some of its losses.

The US trading session saw the Core PCE price index rise below estimates to 0.1%, while personal spending was unchanged. Personal income, for the month rose 0.4% beating estimates. The US Dollar Index was trading mixed as the Greenback managed to rally towards 97.45 but gave up the gains on the mixed economic data to trade back near the 97.2 level.

Later in the day US manufacturing, ISM manufacturing and prices along with construction spending are due to be released which could continue to keep the volatility alive in the markets.

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