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- Pound stumbles on leak of Irish border plans
- Manufacturing decline fails to dent US dollar
- Australian dollar slides after RBA interest rate cut
Risk of hard Irish border weighs on pound
The leak of the government’s supposed plans for the Irish border saw the pound trending sharply lower against many of the majors yesterday.
Markets were spooked by the possibility of a hard Irish border in the face of elevated odds of a no-deal scenario.
Additionally, after the less-than-impressive nature of September’s UK manufacturing PMI, investors expect to see a similarly lacklustre performance from the corresponding construction PMI.
Although the construction sector only accounts for a small fraction of UK gross domestic product, another PMI contraction could still weigh on GBP exchange rates.
Jobs data could weaken US dollar
Although the US ISM manufacturing index unexpectedly slumped to 47.8 in September, falling further below the line separating growth from contraction, this failed to dent the US dollar yesterday.
As the Markit manufacturing PMI proved more positive in nature investors maintained a relatively optimistic view of the economic outlook.
However, USD exchange rates could falter this afternoon if the ADP employment change figure shows a weakening of the US labour market.
Evidence that the labour market is struggling may put a dampener on the US dollar ahead of Friday’s non-farm payrolls report.
Australian dollar restrained by RBA rate cut
The Reserve Bank of Australia’s (RBA) decision to cut interest rates to a fresh record low of 0.75% put the Australian dollar under pressure.
While Governor Philip Lowe indicated that the Australian economy is currently at a turning point, this was not enough to dispel speculation over the potential for further rate cuts.
AUD exchange rates look set to remain on a bearish footing today as worries over the global growth outlook persist.
However, if tonight’s services PMI sees an uptick on the month as forecast the Australian dollar may find a rallying point.
Wednesday, 2nd October 2019
09:30 GBP Construction PMI
13:15 USD ADP Employment Change
11:30 AUD Services PMI
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)