In contrast to yesterday’s manufacturing figures, today’s construction Purchasing Managers Index (PMI) came in worse than expected. Analysts were predicting a modest monthly fall in the index to 53.1, however, the figure came in at 51.6, down quite significantly from last month at 53.8.
Following the news that activity in Britain’s construction sector slowed to its weakest level for eight months, sterling has taken a dive. The survey suggests construction will not make as strong a contribution to growth in the fourth quarter as it did earlier in the year. Thin trading volumes ahead of statements from the UK, US and EU central banks tomorrow and Thursday could have exacerbated the losses.
In other news, a surprise decision by the Reserve Bank of Australia to raise interest rates to 4.75% has once again sent the aussie through parity with its US counterpart to hit $1.0022, its highest level ever recorded. With very strong fundamentals and growing exports to China, Australia stands in a very strong position. In fact very little seems able to stop the aussie at the moment. Let’s hope the autumn internationals see a different result.
Tom Hampton
Analyst – Caxton FX
