Aussie dollar down while US stocks are up

Share Markets: 

After a shaky start, the US stock market strengthened on Friday night, with strong manufacturing data boosting investor sentiment.

The Dow rose 0.3% and the S&P 500 and the Nasdaq lifted 0.5% for the session.

Interest Rates: 

US government bond yields edged higher on Friday night, as a slight lift in risk appetites dampened demand for safe haven treasuries.

The yield on the 10-year government bond edged up 1 basis point to 1.57% and the yield on the 2-year government bond rose by 2 basis points to 0.70%.

Market pricing of the Fed funds rate was unchanged, implying a 25% chance of a rate hike in September, a 55% chance by December, and 100% by Sep 2017.

Foreign Exchange: 

The US dollar index rose 0.6% from Friday morning, to a four-month high.

Sterling weakened after weak UK economic data raised concerns about the outlook for UK economic growth following Brexit. GBP/USD fell from a high of 1.3291 on Friday evening, to currently trade around 1.3121. The Euro weakened.

EUR/USD fell from a high of 1.1041 to trade at 1.0970 at the time of writing. The US dollar strengthened against the Japanese Yen.

USD/JPY rose from a low of 105.57 on Friday morning, to a high of 106.40 on Friday night.

AUD fell from 0.7508 on Friday morning, to a low of 0.7443 early Saturday morning, to currently trade around 0.7463. 

The New Zealand dollar has finish little changed from Friday morning. NZD/USD ranged sideways between 0.6980 and 0.7017, opening this morning around 0.6995. AUD/NZD fell from 1.0728 on Friday morning, to 1.0644 earlier this morning.


The oil price declined further amid concerns about a supply glut and US dollar strength. 


There were no major economic releases on Friday.


The Eurozone Markit manufacturing PMI fell to 51.9 in July, from 52.8 in June.

The Markit services PMI edged down to 52.7 in July from 52.8 in June.

The manufacturing and services PMI both held above 50 in July, indicating expansion in activity in these sectors, which was encouraging in the aftermath of the UK Brexit vote.

United Kingdom: 

The UK Markit manufacturing PMI fell to 49.1 in July, from 52.1 in June.

The Markit services PMI fell to 47.4 in July, from 52.3 in June. Both PMIs were impacted by the Brexit vote and are now below 50 signalling contraction in activity in these sectors.

United States: 

The US Markit manufacturing PMI lifted to 52.9 in July, from 51.3 in June. This was the highest reading since October 2015.

The reading signals more rapid expansion in manufacturing activity and adds to the run of recent stronger US economic data.

Topics:  economy st george economics

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