UK PMI above expectations

 

UK PMI released early today came in above expectations however Sterling failed to respond and we are still trading friday`s ranges. Key levels still hold at $ 1.60 & € 1.10

Friday's Lisbon Treaty vote in Ireland went through with a resounding 67.1% of the Irish electorate voting ‘Yes' following a 58% voter turnout. This turnout was five percentage points up on the first Lisbon referendum in June 2008. Pressure from EU leaders now falls on Czech president Vaclav Klaus to sign the treaty; although the Czech parliament has ratified the Treaty, a presidential signature is still required to formally complete the process. With all this going on over the past few days, there has been surprisingly little impact on the Euro as it remains well-supported above the key levels of 1.4550 against the USD and 0.9100 against Sterling. Back across the Channel, Tory leader David Cameron has said he will hold a referendum if the Lisbon Treaty has not been ratified in all member states by the time he is prime minister.
 
 
The G7 finance ministers' meeting in Turkey on Saturday went without a hitch, with the subject of foreign currency volatility on the agenda as predicted. The G7 audibly welcomed China's pledge for greater FX flexibility moving forward. Japan's new Finance Minister Fujii was again in the press commenting (post conference) currency devaluation was not welcomed, and that Japan would take FX market action (i.e. intervention) if moves were excessive/one-sided. Mr Fujii also emphasised the Japanese economy was not ready for exiting financial stimulus strategies just yet; this statement echoes similar comments from fellow G7 members recently. World Bank and IMF meetings in Istanbul yesterday & today respectively followed the G7 discussions.
 
Elsewhere overnight saw increased speculation down under of an interest rate hike by the Reserve Bank of Australia at its next meeting tomorrow. Well-respected editors of the Australia Financial Review and the Sydney Morning Herald newspapers both wrote that a move to 3.25% was now likely at Tuesday's meeting. The RBA's last move was a 0.25% cut in May this year.


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