The UK economy is continuing to see signs of growth through the 2nd Quarter of 2014 with UK House prices rising unexpectedly by 1.2% which helped to carry the British Pound to 6 year highs against the USD at 1.69189. Mortgage Approvals had analysts’ expectations at 71k and the actual figure falling short at 67.1k. The GBPAUD has not really joined the party yet with firm resistance coming in at the Head and Shoulders neckline of 1.82790.
On the other side of the Atlantic ISM Manufacturing came in better than expected with forecasts of 54.3 giving way to a actual reading of 54.9. This reading is a survey of more than 300 manufacturing firms that keeps an eye on employment, production inventories, new orders and supplier deliveries.
By watching the ISM Index, investors are better able to understand overall national economic conditions, with an improving ISM showing that the economy is growing as a result of higher corporate profits , which filter down to the overall economy through consumer spending.
As is the case every month, all eyes will be on the Non Farm Payrolls which are due to be released over night, with a target of 215 Thousand jobs to be added versus 192 Thousand for the month of March. If Jobless claims which were released Thursday night are anything to go by (increased to 344 thousand verses 320 thousand expected) then it is a tall order to meet analyst’s expectations this time round.
If we do get a miss in jobs added, then that could reinforce the Feds policy of low rates for an extended period of time, causing potential US Dollar weakness and Aussie, Euro, and Pound strength.
To top off the night Chinese Non Manufacturing PMI is set to be released with a reading above 50 indicating non manufacturing expansion, and a reading below 50 indicating contraction, so it could be a bit of a tug of war in regards to the Australian Dollar’s direction, with its rally of the last 2 months at potential risk of a much larger sell off.