Earlier in the Day:
Material macroeconomic data through the Asian session was limited to China’s September service sector PMI numbers, which disappointed as the PMI slipped from 52.7 to 50.6, suggesting that sector activity stagnated. The softer output was in stark contrast to manufacturing sector output which had impressed the markets, with China’s CSI playing catch up this morning, following Golden Week last week.
At the time of writing, the CSI300 was up 1.56%, with the ASX200 in positive territory, while the Hang Seng slipped with Galaxy Entertainment and Sands China joining property and energy stocks to pull the index into the red.
Property stocks came under pressure following news of disappointing home sales in China, while Macau’s Gaming Association reported marginally better revenue compared with the previous year.
On the currencies, the story of the morning was a bounce in the Pound, which recovered to $1.31 levels through the Asian session, while the EUR, the Aussie Dollar and the Yen were relatively flat through the session.
For the Kiwi Dollar there were further declines, down 0.28% at $0.7073 at the time of writing, as the talk of coalition talks continues to take its toll, following the official vote count from the General Election, which showed greater support for the centre-left. It’s all in the hands of NZ First leader Peters now, with the National Party and Labour – Green needing NZ First’s nine seats for a parliament majority.
Noise over progress on the negotiations will continue to dictate direction of the Kiwi in the coming days before any announcement, with a near-term uptick in the kiwi likely should it go the National Party’s way, though sentiment towards monetary policy and the economy in general will limit the upside.
The Day Ahead:
There are no material stats scheduled for release through the European and U.S sessions today, with stats out of the Eurozone limited to this morning’s August industrial production figures out of Germany. The numbers came off the back of a strong rebound in factory orders numbers released last week.
Despite the positive numbers, the EUR took a tumble in the wake of the numbers, falling from $1.17369 to $1.17299.
While the EUR moved into the red, down 0.04% at the time of writing, the Pound was up 0.33% at $1.3109. The gains came off the back of news that the UK Office for National Statistics had made an error in its calculation of company employment costs. The numbers are expected to be revised upwards, which will be seen as another reason for the BoE to make a sooner rather than later move on a rate hike.
The Pound is not out of the woods however, with British Prime Minister Theresa May scheduled to speak in the Commons today. How the speech to call for an open mind on Brexit is received will likely have a material impact on the Pound, which has been under pressure in recent weeks as speculation begins to mount on a possible change in Tory Party leadership and yet another snap General Election early next year.
Despite a softer EUR, the Dollar Spot Index was down 0.03% at 93.772 with a lack of stats through the day to fuel the Dollar rally, though yield differentials will certainly continue to favour the Dollar, with recent macroeconomic data out of the U.S suggesting that the FED may be falling behind the curve.