Chinese Caixin Services PMI Printed Strong Number
No Change By The RBA
More Data To Watch
European futures are trading mildly higher as the dust settles from North Korea’s Hydrogen bomb test. As we said yesterday, when it comes to the geopolitical tensions, investors are increasingly becoming immune to similar news. Yes, there is always a knee-jerk reaction to the newly developed situation, but the focus goes back to the major fundamentals and they become the driver for the economy.
Although for the time being, this may not be a bad strategy, it would be absolutely naïve to think that these geopolitical threats are not real. The situation can get out of hand quick and fast. How far can you push your luck – that is something which is concerning.
Chinese Caixin Services PMI Printed Strong Number
We also had another important set of economic data released overnight. The Chinese Caixin services PMI number. The number has improved massively by coming at 52.7. The forecast was for 51.5.
No Change By The RBA
No unexpected reaction from the Royal Bank of Australia in relation to their monetary policy. The bank held its interest rate as expected. It has been nearly thirteen consecutive months that we have not seen the bank moving any muscle. Both growth and inflation have picked up and the bank will have to take the emergency support off at some point. Nonetheless, the bank still thinks that the economy needs a low level of interest rate to boost the economic growth. The Aussie is still finding love among traders against the dollar however it has retraced from its highs of the day.
More Data To Watch
Sterling relatively had a much quieter day yesterday. The construction PMI number slipped further and touched the low of one year at 51.1. If the upcoming services PMI number (due later in the morning) also failed to impress, the effect could be much bigger.
Ahead of the ECB meeting, traders are going to keep their attention on the services data today. We will see the services PMI from Spain, Italy, France and Germany. The services PMI number has been sturdy throughout this year. However, in today’s upcoming number, we are expecting a little weakness across the board.
Over in the US, investors will be returning from their long bank holiday weekend. Speeches are slated from a number of Federal Reserve committee members. More noise equals more volatility for the dollar.
