Global Risk Sentiment Sours as PMIs Show Red
AUD
Disintegrating risk sentiment across the globe as a result of poor PMIs and a lingering hangover from last week’s less-than-bullish RBA meeting minutes, has lead the AUD to open lower this morning against the majors. Asian equites closed in the red on Friday, with the ASX -1.3%, Shanghai Comp -1.3% and the Nikkei -1.5%. Commodities were mostly lower with Crude Oil -0.3%, Natural Gas – 5.9%, Gold +0.2%, Silver -0.2%, Iron Ore -0.3% and Copper -2%. With a Chinese bank holiday on Friday, only 2 pieces of data out locally in the form of Flash Manufacturing & Services PMIs. The Manufacturing numbers saw slight gain of 0.2 from previous 48.6 (this was the only global manufacturing PMI number to show an improvement, although still remaining firmly in contractionary territory below 50.0), and the Services number saw a slight drop from 52.1 to 50.7. No data out locally today but we will see the release of China’s CB Leading Index m/m which shouldn’t affect markets to drastically. Looking ahead, on Wednesday the monthly CPI indicator for May which will be very closely watched for RBA implications. Last month it was this same CPI figure that stubbornly increased despite the RBA's best efforts to quell inflation. With the RBA deciding on interest rates gain in just 8 days time, Wednesday's CPI number is firmly in the headlights.
USD
The AUDUSD pair fell steadily during Friday’s session, giving up one full cent from top to bottom before opening this morning slightly off the low at 0.6680. Global risk sentiment was down as risk assets, AUD included, fared poorly as well as Wall Street which closed in the red on Friday with Dow Jones -0.5%, S&P 500 -0.8% and NASDAQ -1%. As was the trend across equivalent data worldwide, US Flash Manufacturing & Services PMIs both showed a deterioration since last month's result. As is also typical the world over, the Manufacturing sector seems to be faring worse than Services in the US economy. This week is off to a slow start with no data due for release tonight, but things will heat up with GDP data on Thursday night and the the Core PCE Price Index (which is the Fed Reserve's preferred measure of consumer inflation) due on Friday night.
EUR
Despite a series of European Data misses the Aussie Dollar fails to capitalize opening around 45 pips lower this morning at 0.6125. European Equities closed lower in Friday with the DAX -1% and CAC -0.6%. Friday saw the release of Eurozone PMI numbers for the evening came in below expectations with the Eurozone’s Flash Services PMI reading at 52.4 against an expected 54.4 (previous 55.1), and Flash Manufacturing PMI reading at 43.6 against an expected 44.8 (previous 44.8). Both French and German Flash Manufacturing and Services PMIs all came in under expectations as well. A quieter day ahead with only the release of German ifo Business Climate and German Buba Monthly Report.
GBP
The AUDGBP falls back into the 0.52’s, seeing lows of 0.5236 before slightly retracing, still opening lower at 0.5246. British Equities also saw losses with the FTSE losing 0.5% on Friday'[s close. Friday also saw both Flash and Services PMIs miss market expectations, Manufacturing missed expectations of 46.9 at 46.2, and Services missed expectations of 54.8 at 53.7. Looking to the day ahead we will only see the release of CBI Realized Sales and MPC Member Dhingra Speaks.
NZD
The AUDNZD falls back into the $1.08’s, opening lower this morning at close to 1-month lows of $1.0857. There was no Kiwi data out on Friday, no data out today, and nothing until Thursday where we will see the release of the ANZ Business Confidence.