By Nicholas Cork
German data surprised with its weakness overnight with manufacturing PMI falling to its lowest level in 10 years at 41.4 against expectations of 44. The survey noted that “slumping manufacturing orders led the decline” and the automotive sector was highlighted as a particular source of weakness. Services PMI also weakened to 52.5 against expectations of 54.3, with the possibility now that Germany may have fallen into a technical recession in Q3.
Eurozone PMI was also weak with manufacturing PMIs falling to 50.4, resulting in its weakest reading since mid-2013. Eurozone services PMI fell to an 8-month low of 52, indicating that the whole EU zone is far from showing signs of recovery. Outgoing ECB president said that “Euro area growth momentum has slowed markedly, more than we had previously anticipated. This slowdown is mainly due to the weakness of international trade in an environment of persistent uncertainties related to protectionist policies and geopolitical factors.” The fact is you don’t hear much talk about Globalization anymore when it was such a buzzword for so long.
The AUD slumbered through yesterday’s session trading within a 0.6760 to 0.6780 band, with the market awaiting a speech from the RBA Governor this evening. The NZD was more impressive as it traded with a 0.6250 to 0.6300 range ahead of tomorrow’s RBNZ announcement, the move reflected in AUDNZD as profit-takers took it back to 1.0750 from highs near 1.0830 after seeing a near 600 point rally since the start of August.
Australian PM Morrison joined a recently formed chorus arguing that China is no longer a developing economy and as such does not deserve “special and differential treatment” at the World Trade Organisation any longer. “China’s economic growth is welcomed by Australia and we recognise the economic maturity that it has now realised as a newly developed economy,” Mr Morrison said. “This was the point of the world’s economic engagement with China.”
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