From Arab Bank’s Treasury Dealer David Scutt, here’s a quick guide to what Australian traders will be thinking about as the day gets underway.
A bit more to cover than usual this morning after the FOMC statement early this morning. Have a good one.
As expected, the Federal Reserve’s FOMC kept monetary policy unchanged overnight, leaving the official interest rate at 0-0.25% and asset purchase program steady at $85b per month. While that was a near-certainty, given all the will-they-or-won’t-they taper talk seen in recent weeks, all attention was directed towards the wording in the accompanying monetary policy statement with the committee reaffirming yet again that they will ‘employ (their) policy tolls as appropriate, until the outlook for the labour market has improved substantially in a context of price stability’. As they had done previously, they noted that they were prepared to increase or reduce the pace of asset buying depending upon labour market condition, indicators of inflation pressures and inflation expectations with any reduction having to be consistent with their long-run mandates of maximum employment and inflation of 2%.
The ASX 200 looks set to open flat this morning with SPI futures pointing to a rise of 2pts on the open. While higher base metals prices and the lower AUD will help lift the materials sector in the early parts of trade, a continued deterioration in the official Chinese government PMI reading due out at 11am could see gains quickly evaporate should we get a sub-50 outcome.
Having been smashed lower by better-than-expected ADP and Q2 GDP prints in the States, the AUDUSD has opened the session below .9000 for the first time since Sept 1, 2010 this morning with the pair currently fetching .8957. As is the case with equity markets, the official Chinese manufacturing PMI print will be highly influential today with a sub-50 result set to see the pair test the resolve of buying support below .894. To the topside, selling is set to resume from .8980, .9000 and again at .9040.
Australian data releases today include the AIG Performance of manufacturing index, HIA new home sales, Q2 import/export prices along with the RBA commodity price index.
Regional data releases today include manufacturing PMI gauges from China, South Korea, India and Taiwan along with CPI and trade figures from South Korea. As you would expect, the official China PMI reading out at 11am, along with the HSBC gauge at 11.45am, will dominate proceedings.
As is the case with Asia, global manufacturing activity will be the centre of attention this evening with the US, Canada, the UK and Europe all scheduled to report figures for July. Elsewhere we’ll also receive jobless claims, the Challenger layoffs series and construction spending from the States, the Halifax house price survey from the UK along with monetary policy decisions from the Bank of England (9pm) and European Central Bank (9.45pm, Press Conference 10.30pm).