Forex Forecast

PMIs Disappoint Again The series of PMI estimates showed further contraction in some of the European services sectors. in September. Spain (40.2 from 44.0), France (45.0 from 46.1), Germany (49.7 from 50.6) all missed consensus estimates, though the composite indicator ticked up marginally (though still remains in contraction territory).

Aussie Exports Weaken Australian exports fell sharply in August, reflecting softer commodity prices that are only now beginning to make their presence felt in economic data releases.

AUD Still Weak Amid limited data releases, the downslide in AUD continued during the New York session as AUDUSD dropped almost by a big figure on Tuesday.

NOKSEK Breaks Higher The news-wires were very quiet on Tuesday and FX markets were accordingly directionless.. There were a couple of exceptions however, NOKSEK broke higher, testing the 100dma and trading up to a high of 1.1572 on limited data or news.

RBA Cuts 25 bp The RBA lowered the cash rate by 25 bp to 3.25% overnight citing “international developments” which have made the growth outlook for next year look “a little weaker”.

ISM Back In Black Manufacturing PMIs in Germany, France and Italy improved slightly in September, though they continued to be in the contraction zone.

Mixed Signals A series of manufacturing PMIs were released with mixed results There were minor revisions to preliminary estimates but the French numbers (42.7) were confirmed as falling significantly from August, while German numbers (47.4) rebounded.

Reserve Composition Mostly Unchanged EURUSD fell back to a two-and-a-half week low overnight after Slovak Prime Minister Fico said that if Greece does not meet its commitments, then a coordinated exit from the Eurozone should happen.

Moody’s Spain Verdict Still Due Spain’s bank stress tests results showed capital needs at close to EUR60 bn, as expected. Details showed that 7 of the 14 banks tested do not have additional capital needs even under a “highly unfavorable macroeconomic scenario”.

Month End Price action in the FX markets was dominated by month and quarter-end rebalancing flow and, in Japan’s case, flows associated with the end of the fiscal half-year.

Moody’s Spain Verdict Due Price action overnight was dominated by quarter-end flows and, in Japan’s case, flows associated with the end of the fiscal half-year. Spain remains the centre of attention with bank stress test results due to be published today.