Intraday Market Thoughts

UK Construction Sector Contracts

by Patrik Urban
Oct 2, 2012 13:02

Spain could request bailout; RBA cuts by 25 bps; UK construction PMI rose but sector contracts; Eurozone PPI higher. The greenback is mixed in the ongoing session. It is stronger against AUD, unchanged against JPY and CAD and weaker against the rest of the majors. European equities are gaining about 0.5% and the relative strength winners are NZD with EUR while AUD is the weakest. New Premium Insights have been added with special technical charts for silver weeklies. See more below.

Spain is ready to officially request a bailout as early as next weekend Reuters reports. Nevertheless, Europa Press suggests that Spanish PM Mariano Rajoy said that he would not seek rescue this weekend. Reuters also reported that the EU advisory group recommends legal separation of banks' proprietary trading and derivatives positions from deposit taking. Spanish 10 year yield is lower today, trading around 5.74%

The Aussie declined across the board after the RBA decided to cut rates by 25 bps to 3.25%. The board noted weaker growth outlook for the next year with inflation consistent with the target. Softer labor market, lower commodity prices and higher exchange rate were also noted. AUDUSD fell from 1.0373 to 1.0290 and continues to trade near session lows.

UK construction sector contracted for the second time in a row as September PMI printed 49.5 from previous 49.0. Output and new business levels declined, cost pressures intensified as inflation hit six months high but employment rose slightly. UK Nationwide HPI fell 0.4% in September after 1.1% gain seen in August. GBPUSD trades little changed around 1.6150 and EURGBP around 0.8000.

Eurozone PPI rose sharply in August to 0.9% from 0.3% m/m and to 2.7% from 1.6% y/y. Spanish unemployment rose by 79.6K EURUSD trades firmly above the 1.2900 mark.

There are no reports due during the NY session today.

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