Yesterday’s drop in the UK PMI sent the GBPUSD lower as speculation for aggressive easing by the BoE rose. As a result, EURGBP rose to the highest level since July 12. Also yesterday saw OIL cross a very important technical indicator, suggesting that it is now in a bear market. Overnight, Australia lowered interest rates to a historic 1.5%, in line with expectations. Today’s focus will be on UK construction PMI, US personal spending as well as a speech from Dallas Fed President Robert Kaplan.
Currencies: Overnight, the dollar held onto gains against the other major currencies on Monday, even after data showed that manufacturing activity in the U.S. fell more than expected in July, but the USD still remained within close distance of a five-week trough. RBA rate cut to 1.5% as expected caused the AUDUSD to drop 70 pips, but the losses were erased shortly afterwards. CAD is also making headlines as the currency has weakened due to its correlation with falling OIL prices.
Stocks: Asian shares slipped today, following the lead of Wall Street. Australian Shares were down 0.6% after RBA cut interest rates to 1.5%. European markets are set to open flat to slightly lower, with FTSE 100 and France’s CAC 40 expected to open 0.1% lower and Germany’s DAX to start the day flat. Japan’s Nikkei stock index slipped 1.%.
Oil and Gold: Oil has crossed the 15/50/200 day moving average, a very bearish signal. The last time this has happened was November last year, where the price reached $26 by January. The price of oil, dropped below $40 for the first time since last April, a 3.7% drop. Brent crude was 0.4% higher at $42.30 after closing down 3.2%. GOLD edged higher to $1354 on the back of a weaker USD.
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