Antipodean expectations

Successful Aussie
The World Economic Forum lists "14 things successful people do before breakfast". Inter alia they make their beds, go to the gym, drink water and formulate strategy. But here's the thing: successful people apparently don't go to the bathroom before breakfast. Nor do they cut interest rates.

At least, the successful people at the Reserve Bank of Australia don't. A degree of confusion surrounded the RBA's announcement this morning that it would keep its benchmark Cash Rate at 2% for a sixth month. Whilst most analysts had predicted that would be the case, a goodly number of investors had been looking for a quarter-percentage-point reduction to 1.75%. 

When the cut failed to materialise, the Aussie oscillated across a two-and-a-half-cent range before heading higher. Eventually it became the day's top performer with a gain of one and three quarter cents against sterling. Investors did not worry too much about the RBA's observation that "the outlook for inflation may afford scope for further easing of policy". 

Steady sterling
The pound reacted strongly to news that the UK manufacturing sector purchasing managers' index had jumped four points to 55.5, its highest level since July last year. Sterling failed to hold onto its gains and is unchanged, on average, against the other dozen most actively-traded currencies.

Sterling was already looking perky ahead of the PMI announcement and it added a further half-cent on the news. However, it spent the rest of the day on the retreat. Investors may have been surprised by the robust figure but they clearly remained unconvinced that it signified a resurgence of British manufacturing supremacy.

Monday's unlucky loser was the NZ Dollar, which lost nearly a cent. It downfall was almost entirely due to the RBA statement, which served as a reminder that the Reserve Bank of New Zealand could be girding its loins for a rate cut next month.

Pause for breath
As usual, the agenda for the day between the flurry of manufacturing PMIs and the flurry of services sector readings looks a bit sparse. The only ecostats from Europe are the change on Spanish unemployment and the UK construction PMI.

Britain's builders are expected to report slightly less gung-ho activity than they enjoyed in September. Other data during the London day are limited to the Global Dairy Trade price index (which can affect the Kiwi) and US factory orders (which seldom affect anything). The most important numbers come tonight, with Australia's balance of trade, retail sales and services PMI, New Zealand's employment data and services PMIs from Japan and China.

Two central bankers will be on display, both at the end of the London session. The Swiss National Bank's Thomas Jordan will talk about SNB monetary policy and Mario Draghi, the president of the European Central Bank, will speak at the "Opening of the European Cultural Days 2015". Herr Jordan might say something interesting but Sig. Draghi tends to stick to the topic when he gets involved in arty stuff.