Currency markets are likely to be impacted by a potential US Government shut-down if Congress fails to negotiate budget legislation. With a Senate rejection to stop gap 12 month delay on the funding bill deadline by 56-46 votes, markets are getting confident that it is inching closer to a resolution. And that confidence has meant safe haven asset demand has backed off with the US dollar now buying 98.30 Yen, an 80 pip gain through the US session. The Gold price is down 10 dollars from yesterday’s highs trading at 1330 USD an ounce this morning.
The Australian dollar had a pretty stable Monday considering the US drama and softer than expected Chinese HSBC manufacturing PMI data yesterday. The Aussie sits at 93.14 US cents, up about 15 pips from yesterday open and 30 pips of the overnight high, after trading in the tight range for the last 20 hours. The obvious focus today will be this afternoon’s RBA rates decision with a cut being unlikely but the language in the statement for suggestion of a possibly future cut to help with downward slide in our unemployment rate.
The local session will be active before this afternoon’s RBA decision with a 0.3% rise in monthly retails sales data expected. Preceding this release will be Chinese official manufacturing PMI data with the 4 straight month of increasing industry expansion on the cards. The likelihood of significant Aussie upside is on the cards if the US government stumbles before there midnight deadline and we get expectation met from the three pieces of AUD centric data today.
