Australia’s softer inflation data, the euro area’s bal-ance of stronger preliminary PMI’s and concerns over a failed Russian bond auction have driven movement in AUD (weakness), EUR (strength) and JPY (strength) ahead of the NA open, as China’s HSBC flash manu-facturing PMI provided no surprises with an as-expected 48.3. SEK and CHF have responded in sympathy to the strength in EUR, while CAD and NZD are slightly weaker. GBP is underperforming, weighed by softer CBI figures as market participants found no surprises to the BoE’s MPC minutes. The broader market tone is one of modest risk aversion as both equity futures and the US 10Y yield fell in reaction to the Russia bond auction headlines. Focus for the NA session will remain on US growth with the release of the preliminary Markit PMI (exp. 56 vs. 55.5 prev.) as well as the housing sector with new home sales expected to rise to 450K. The RBNZ decision takes place at 5:00pm EST, with expectations of another 25bpt rate hike to 3.00%.
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Scotiabank