The Australian Dollar is set for a volatile week with a vast array of high level economic data out this week; however Monday provided a relatively stable day of trading as the market awaits the commencement of high level data out today.
Yesterday the Australian Dollar stabilised slightly with some positive sentiment relating to the release of China’s Caixin Manufacturing PMI data release which whilst still in contraction was better than forecasted and previous readings had been coming in at 48.3 up from 47.2. The Australian Dollar made it to a local session high of 71.50 US Cents.
Whilst most Australians will be focused on the Race that stops the nation, a mere half an hour before the Melbourne Cup’s main race, traders will turn their focus to The Reserve Bank of Australia (RBA) with the latest Official Interest Rate Statement. The markets are currently pricing in the possibility of a rate cut at approximately 44% likelihood, difficult odds.
The odds of a cut have been steadily increasing after Australia last week released disappointing Consumer Price Index figures, showing a decline in the inflation levels in Australia for the third quarter form 0.7% to 0.5%, fuelling speculation of the first Rate Cut since May with Rates currently at 2.0%.
The Offshore session overnight saw a plethora of Manufacturing PMI data released, including the UK which provided a positive improvement at 55.5 well above the expected 51.3 and previous at 51.8, the result however didn’t provide any strength to the Pound as the AUD/GBP exchange rate overnight stayed relatively range bound currently trading at 0.4634.
Other PMI releases included the Euro Zone countries of Spain, France, Germany and Final combined for the Euro-Zone. All of which were above expansion and positive on expectation. The US also released PMI data which came in line with expectation and just above expansion at 50.1.
All of which has largely been ignored against the Australian Dollar as really the focus is still solely based on the RBA today and the possibility of the rate cut.
Today traders are taking their bets on this two horse race, what’s your punt?