Good morning all!
After a quite start to the week due to the Labor day holiday in the US traders will look to get going as what is a heavy week for economic data starts to gear up. Of course we cannot forget the geopolitical tensions that are plaguing certain regions, as Ukraine looks to act to push Russian forces out of Ukraine, and Shia and Kurdish forces push back Islamic State fighters in northern Iraq. Over the weekend Ukrainian president Mr Poroshenko met with EU leaders in Brussels in order to thrash out the terms of a ceasefire that would see Russian forces move out of Ukraine and the boarder close. The alternative to this discussed were yet more sanctions placed from Europe on to Russia. However when it comes to the sanctions it seems that Russia holds all the cards. Europe is too worried that any retaliatory sanctions could hit the region’s economy, an economy, as we know is already fighting to keep its head above water. This is one of the reasons European leaders are talking to Latin American leaders about implementing their own sanctions. A move that would hit Russia just as hard and ease the burden on the Eurozone economy. One thing is for sure, if the Kremlin continues to support the rebels, the greater the fear from Ukraine and the whole of the west that Russia will launch a full scale invasion of the Ukrainian territories.
We say that the economic calendar starts to gear up today, however Tuesday’s session is still one of the quiter sessions of the week. With US markets back after the long weekend we can can expect to see volume pick up. Something that will be a huge relief to currency traders. The data started overnight after the RBA released their interest rate decisions and as expected left rates on hold at 2.5%. The Australian central bank also stated that they didn’t expect a change in monetary policy for a sustained period of time due to improvements in the labour markets. Sound like a familiar theme? Of course in the UK and US we have had a familiar tone for a long while however the difference being that the Australian economy always managed to hold its self together with the central bank rate remaining manageble. Later this morning we get the second round of PMI readings from the UK and after a weaker manufacturing reading yesterday today’s construction reading is also expected to fall. We are expecting a fall from 62.4 to 61.4 but this still remains better than yesterdays manufacturing reading of 52.5. All eyes will of course be on the largest part of the UK economy when services PMI is released tomorrow.% | % | %