Economic fundamentals were relatively light for most of the Asian trading session. The RBA's interest rate decision was unchanged at 2.5% as RBA governor Stevens continues to highlight the risk of a strong Aussie dollar as global commodity prices continue to decline. The Aussie dollar made an intra-day low of 0.8645 before paring its losses to move higher for most of the day.
UK Construction PMI declines to 61.4 in October
The construction PMI in the UK came in below estimates at 61.4 for the month of October, down from 64.2 in September. The survey estimates were calling for a softer decline to 63.5. The current reading at 61.4 marks the lowest construction PMI reading in five months.
Business activity in the sector however remained firmly above the level of 50, which accounts for close to 6% to the total GDP for the country. Commenting on the release, Markit senior economist said that October's construction PMI reflects on the headwinds to the UK's housing market which is weighing in on the residential building sector. Most recent statistics from the ONS show that the construction sector output had increased 3% compared to the previous quarter. Despite the lower than expected reading, the latest construction PMI figures continue to show a sixth consecutive quarter of a year on year increase since Q2 of 2013.
The British Sterling's reaction was mostly muted, with the Cable making a brief decline to 1.59795 at the time of the release. The EURGBP managed to etch some gains since the start of today's trading. The pair is currently trading with the intra-day range of 0.783 and 0.7812
Yesterday, the manufacturing PMI increased to 53.2 in October, up from 51.5 in October. The survey published by Markit and CIPS noted that the manufacturing sector had made a 'bright start' to the fourth quarter of 2014. The manufacturing sector has often been hit by risks from the Eurozone and the October reading shows that the sector managed to beat the odds. The Eurozone's PMI manufacturing had been soft for the month of October with 50.6 compared to 50.3 in September.
The services PMI data is on the tap tomorrow and is an important piece to the puzzle as it accounts for more than 78% of the total GDP. Expectations call for a soft reading of 58.5, after previous month's actual results of 58.6.
Some members of the Bank of England turned dovish on interest rate hike due to the slowdown in the Eurozone, one of the the UK's largest trading partners. The current economic conditions, especially the inflation and unemployment slack continue to support the BoE's current monetary policy for longer than expected, said Jon Cunliffe few weeks ago.
Eurozone PPI improves but mixed
The producer price index from the Eurozone managed to rise above expectations to 0.2% growth but last month’s PPI was revised downwards from -0.1% to -0.2%. The PPI y/y posted a decline of -1.4% but less than expected.
The US trading session will see the release of US factory orders which is expected to decline by -0.6%. Trade balance data is also on the tap both from the US and Canada.