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AUS Manufactuing PMI Improves, Building Approvals Sink 5.7% In Australia, activity in the manufacturing sector expanded at a faster pace in April than March. The PMI measured 52.7 led by an increase in production and new orders, while employment declined. Building approvals for March fell 5.7% as the housing market and construction slump. AUD/USD - Aussie Gives Back Yesterday's Gains
The Aussie-US Dollar pair rose yesterday prior to the Fed's anticipated interest rate cut as the spread between the two countries widened. This trend did not extend much longer after the announcement. Instead, the weaker Australian housing data and continuing speculations of a Fed pause wiped away those gains. US Spending Increases 0.4%, Doubling Expectations US personal spending heated up in March, rising 0.4% compared to 0.1% in February. The figure doubled the consensus estimate, and was a positive sign for the economy as consumer spending makes up roughly 70% of the GDP. Incomes increased 0.3%, lower than in February, and lower than expected. US Core PCE Higher Than Expected, Up 0.2% on Month, 2.1% on Year The same report revealed that the core PCE, a preferred measure of inflation for the Fed, heated up in March. On the month, core PCE rose 0.2%, and 2.1% on the year, both larger than anticipated. The Fed prefers to see the annual rate between 1% and 2%. With inflation at 2.1%, the FOMC may be ready to hold rates steady as its concern shifts from economic growth to inflation. US Jobless Claims Jump to 380K Weekly jobless claims rose 38K to 380K last week. The number was higher than expected and continues a trend of elevated job cuts. This week's report is more in line with recessionary conditions as companies shed more jobs as a result of a weaker economy. The number of continuing claims rose above 3 million and was at the highest level since April 2004. US ISM Manufacturing In Contraction, but Beats Expectations The Manufacturing sector matched March's figure of 48.6, the 3rd month in a row that activity has contracted. The result was still better than expected. Prices continue to rise, as 84.5% of respondents said they saw higher prices for commodities and energy. Even worse their purchasing power declines as the Dollar continues to fall in value. EUR/USD - Euro Falls to 5 Week Low vs Dollar
The Dollar had a strong day vs. the Euro, paring yesterday's losses and bringing the Euro-Dollar pair down to its lowest level since March 25th. The decline started overnight, and the Dollar's gains were extended as markets focused on the spending and inflation data near the NY open and the better than expected manufacturing data later. A holiday in Europe may have added to the increased volatility in price as liquidity was lower. GBP/USD - Dollar Pares Most of Yesterday Losses
The Dollar-Pound pair also pared some of its losses from yesterday but was not able to reach yesterday's low. Today's action continues choppy, ranging trading for this pair. During the European session, UK manufacturing activity was shows to fall to a three month low. USD/CAD - Loonie Falters on Interest Rate Outlook, Oil Prices
The Dollar surged against the Canadian Dollar, breaking to a new weekly high above 1.02. The Federal Reserve seems ready to stop reducing rates, while the Bank of Canada may have to continue cutting rates to prop up its economy. The outlook for interest rates therefore currently favors the greenback. Also, the price for a barrel of oil fell by $2.50 as of 12 PM, which pressured the Loonie during early NY trading. Upcoming Releases Tonight Australian releases retail sales data, followed by Germany sales figures overnight. Also, the Euro-zone will post its final version for manufacturing in April. Tomorrow, the week ends with the very important US non-farm payroll data which is expected to show the economy shedding another 80K jobs and factory orders for March. |
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