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Where is Darwin and what happened to Australian interest rates today?

Two out of two

The last time the Reserve Bank of Australia's board sat in Darwin, Northern Territory, was in 1968. On that occasion it raised the bank deposit rate "in order to spur saving". It met there again today and, as widely expected, lowered the Cash Rate by 25 basis points to 1%, its second cut in two meetings.

In its statement the RBA cited the need to support employment growth and solidify inflation expectations. On employment the RBA sees "strong" employment growth, with participation at a "record level" with a "high" vacancy rate and "skills shortages in some areas". However, there has been "little inroad into the spare capacity" and "wages growth remains slow".

The statement ended with a promise to "monitor developments in the labour market… and adjust monetary policy if needed". It came nowhere near to hinting at a further rate cut. For that reason, and because the only doubt about today's cut was whether it would come at this meeting or the next, the Aussie suffered no ill effects. It is a third of a cent higher on the day.

Trouble at t' global mill

Whilst it would be an exaggeration to say that all the European manufacturing sector purchasing managers' index readings were bad, it would not be much of an exaggeration. Greece was positive at 52.4, as was France at 51.9. The rest were all in the sub-50 contraction zone.

The best of the worst was Ireland at 49.8, the basket case was Germany at 45.0 and the others were strewn in between. America's two PMIs, produced by ISM and Markit, made the cut with readings of 51.7 and 50.6. Both were above forecast and the US dollar strengthened following their release, though not obviously as a matter of cause and effect.

Britain's manufacturing PMI was even uglier than expected at 48.0, its lowest level since 2012. The report spoke of weakening demand from both domestic and export markets. Data released by the Bank of England showed slowing demand for consumer credit and increased household deposits, suggesting that families were hunkering down in preparation for whatever Brexit might throw at them.

Central bankers

The RBA governor will follow up his monetary policy statement with a speech to the business community in Darwin. The New York Fed's John Williams will be speaking an hour later and the Bank of England's Mark Carney appears after lunch.

Today's ecostat agenda was already half finished by the time London opened. New Zealand's Quarterly Survey of Business Opinion found a "deterioration in demand and sentiment". NZ Building permits rebounded by a healthy 13.2% in May and Australian new home sales jumped a massive 28.8% after an "anomalously disappointing" month in April. German retail sales fell 0.6% in May and UK house prices rose 0.1% in June.

Still to come are Britain's construction sector PMI, Canada's manufacturing PMI and euro zone producer prices. Tonight Australia reports on building permits, the balance of trade and the services PMI.

GBP: Steady against EUR despite weak manufacturing

GBP: Steady against EUR despite weak manufacturing

AUD: Record low Cash Rate

AUD: Record low Cash Rate

EUR: Broad manufacturing slowdown

EUR: Broad manufacturing slowdown

USD: The best of a bad PMI bunch

USD: The best of a bad PMI bunch

NZD: Deterioration in demand and sentiment

NZD: Deterioration in demand and sentiment

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