Home A Robust start to the month

Markets have shrugged off mixed data in Asia overnight delivering a robust start to the month as equity indices across Asia and Europe see green.   Looking at China, there was a slight discrepancy between the official and the Caixin-Markit manufacturing PMI’s with the official data signalling a contraction in manufacturing while the Caixin survey came in better than expected. Overall the market has taken signs of a continued deceleration in China in stride with equities on the Shanghai, Sydney and Tokyo bourses all starting the month off on a solid footing.   In terms of currencies, the yen is currently flat against the greenback while we have seen a spike in both the aussie and kiwi dollars as both currencies have benefited by an uptick in commodity prices.

Moving onto Europe, the good mood established in Asia continues as a slew of economic data out of the European Union came in beating expectations.   With the head of the ECB, Mario Draghi, already expected to deliver further measures in an effort to stimulate the economy on Thursday, data signalling broadly stronger than expected employment and manufacturing in the Eurozone has come at a welcome time for euro bulls with the common currency today breaking trend and actually gaining on its American counterpart. Outside of the EU, disappointing manufacturing data out of the United Kingdom has been largely disregarded as the pound sterling posts gains against both its European and American counterparts.

Ahead of trading stateside, equity futures signal that the good times in Asia and Europe are expected to continue upon the opening bell in New York. From a data perspective today will likely be an interesting one as we have both Canadian GDP and manufacturing PMI data from the United States on the docket, as well as a statement from FOMC member Evans. Given a market that has been exceptionally sensitive to data releases the impact of the GDP data in Canada can go either way but as of yet the loonie has largely benefited from the lift in commodity pricing striking a positive tone against its American counterpart.

Further reading:

ISM Manufacturing PMI in contraction, but employment is positive – USD slides

Three things to watch ahead of the ECB Meeting; EUR/USD trade setup into the rate decision