Aussie rebounds strongly today after RBA left the cash rate unchanged at 2.00% as widely expected. The central bank maintained a mild easing bias with a neutral stance. That is, "outlook for inflation may afford scope for further easing of policy" but the central bank will just "continue to assess the outlook". Meanwhile, RBA did acknowledge "a large decline in capital spending in the mining sector". But it maintained that the economy will have "moderate expansion" and there was "gradual improvement in conditions in non-mining sectors over the past year." Also released from Australia, current account deficit narrowed to AUD -18.1b in Q3, building approvals rose 3.9% mom in October. New Zealand terms of trade index dropped -3.7% qoq in Q3.
The official China PMI manufacturing dropped to 49.6 in November, below expectation of 49.9. That's also the lowest level in more than three years since August 2012. The official PMI non-manufacturing rose to 53.6. The Caixin PMI manufacturing rose to 48.6 versus expectation of 48.3 but stayed well below 50 level. Some analysts noted that the set of data showed divergence in manufacturing and non-manufacturing sectors which is expected to extend into at least mid-2016. Nonetheless, the Chinese markets were support by news that the Yuan got approval yesterday for additional into IMF's list of reserves currencies.
Looking ahead, manufacturing data will be a major focus today. UK PMI manufacturing is expected to drop to 53.7 in November. Sterling edged lower against dollar initially this week but quickly recovered. EUR/GBP and GBP/JPY are also stuck in tight range. We'd expect some volatility in sterling crosses in case of a surprise in today's UK data. Meanwhile, BoE will release financial stability report. Eurozone will release unemployment rate and PMI manufacturing final. German will release unemployment. Swiss will release GDP, retail sales and SVME PMI.
Another major focus today is US ISM manufacturing which is expected to rise slightly to 50.5 in November. The employment component of ISM manufacturing dropped sharply to 47.6 in October and Fed would definitely want to see it bounce back above 50 to prove that it's just a temporary dip. US will also release construction spending while Canada will release September GDP.