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Forex: February commences cautiously

Many asset classes ended the first month of 2015 on the back foot and February starts with a feeling of apprehension. The dollar strength seems to have halted and risk in equities is being called into question especially since January saw the S & P 500 close in negative territory, historically considered to be a bad sign for equities leading to a negative year for the stock market.

In FX markets a few moves are worthy of note as the euro has recovered to its highest level against the Swissie since the SNB removed its peg at 1.2000, testing the 1.0520-25 area and the AUDUSD has bounced fallowing its big fall last week on the back of the very dovish comments from the RBNZ. The thinking is that this means we will see a very dovish statement from the RBA tomorrow and a rate cut from 2.50% in the near term. Whilst AUDUSD is bouncing a little to 0.7790 the near term trend looks negative as sentiment towards these Antipodean currencies becomes more and more bearish, in particular against the dollar.

Today sees a raft of manufacturing data from across both sides of the pond with PMI data from the Eurozone and UK, where both are expected to tick higher and then the US enters the fray this afternoon where the ISM Manufacturing figure is due to tick lower. This ahead of a busy week which culminates in the nonfarm payroll and note again the RBA meets overnight.

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