The focal point of today is the first Reserve Bank of Australia’s (RBA) Official Cash Rate (OCR) decision for the year. The last time Governor Glenn Stevens assessed the state of the Australian economy and OCR for Australia was back in December before the Federal Open Market Committee delivered their rate rise for the first time in eight years in the US and before China’s multiple stock market crashes throughout January which set a volatile open to the year for all currencies associated with China. The Australian Dollar (AUD) was impacted significantly during this time, hitting fresh 6 year lows against the US Dollar (USD) during the latter part of January.
The Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate has been making some recovery since the commencement of the year, mostly thanks to the consistent jaw boning from the Bank of England’s (BoE) Governor Mark Carney who has had very little in the way of positivity in terms of the economic outlook for the UK for 2016. Overnight the Pound gained over 1% against the ‘Aussie’ with PMI data out of China and the UK providing the currency pairing with Pound sided favour.
Yesterday China released their Manufacturing PMI and Caixin Manufacturing PMI both of which came in well below the expansion contraction line again. Manufacturing PMI was at 49.4 down from the forecasted 49.6 and significantly down from the previous figure of 49.7, showing grave concerns for the health of manufacturing in China. This caused the ‘Aussie’ to sell off only slightly during local trading however overnight losses on the Aussie where consolidated with positive Manufacturing PMI out of the UK with a healthy figure of 52.9 well up from the forecasted 51.8. The AUD/GBP Exchange Rate found a daily low of 0.4935.
PMI indexes continued to be the theme of the evening with the release of mixed results in the plethora of manufacturing reports out of the Eurozone and importantly ISM Manufacturing out of the US with another dismal result well below the contraction line at 48.2, consistent with the previous figure however below the forecast of 48.6. The AUD/USD Exchange Rate gained over a percent reaching a high of 71.21 US cents.
The Markets will turn their focus to Governor Glenn Steven’s first day back to work today with the OCR for Australia at 1:30 PM AEST Today. We will be waiting to see the stance for the year ahead given the significant amount of changes that we have seen in the globally economy since last year when Governor Steven’s advised us to ‘just chill out, come back and see what the data says.’ Hopefully Governor Stevens will have some more specific advice for the markets today.
The AUD/GBP Exchange Rate is currently trading at 0.4924
The AUD/USD Exchange Rate is currently trading at 0.7109
The AUD/EUR Exchange Rate is currently trading at 0.6528