Eurozone Purchasing Managers Indices lifted investor sentiment in overnight trading after surprising on the upside. However the lift was balanced out by weaker US PMIs, leading to a drift in US stock trading. Currency traders appeared to ignore the numbers, pushing the dollar higher at the expense of the euro. Industrial metals continued their rise in response to tax cuts for businesses in China.
Market impact from weakness in China and US data is muted by assumptions that they are temporary effects of the trade dispute. Risks are growing that any signs of failure in the current negotiations will disrupt markets given current optimism around the issue.
Australian GDP data today is forecast to show fourth quarter growth of 0.3%, producing a yearly rate of 2.8%. The Australian dollar may be particularly sensitive to the read, given doubts about the Reserve Bank of Australia’s estimate of 3% growth over 2019. The RBA played its cards close to its chest in yesterday’s interest rate statement, and any miss on growth will likely increase calls for interest rate cuts.