European Open Flash PMIs in Focus Potential Bear Flag on EURGBP
A host of flash PMI’s are released for UK, Europe and US which will hopefully provide some pockets of volatility ahead of the weekend.
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Rio Tinto’s quarterly number was largely in line with expectations, but perhaps slightly negative for those expecting a positive surprise. As expected, weather has impacted operations.
The comparable numbers are mostly higher compared to the same period last year but lower when compared to the September quarter of last year.
Weather has been a factor during the past three months with cyclones and floods interrupting production in crucial parts of Australia. Rio Tinto generates a large majority of its earnings from its Pilbara iron ore operations. Production from its iron ore mines fell to 46 million tonnes in the quarter versus 51.2 million tonnes in the previous quarter.
In currencies, the Australian dollar continued to weaken after the Reserve Bank of Australia’s monthly meeting minutes were released. The case for a rate cut has been strengthened from the comments with all eyes on inflation number due later this month.
The market is now starting to price a 25 basis point cut as very likely. The Euro managed to post some gains, last at 1.3108 against the US dollar while the Japanese Yen was virtually flat on the US dollar.
Gold was last slightly lower at US$1648/oz while copper was steady at around US$3.62/lb.
In other regional economic news, India’s central bank cut the benchmark repo rate by 50 basis points today to 8%, in line with our BRIC economies who are easing their monetary policy are growth consolidates.
The reserve ratio requirements were left unchanged. Comments from the central bank included an admission of modest slowdown in the economy with GDP growth now forecast at 7.3% for the 2012-13 financial year. Future policy will remain accommodative and the bank says it will take proactive steps to restore market confidence.
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