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    The Day Ahead - Monday 27th July 2015

    NZD – Trade Balance well below forecasts

    AUD – Pummelled by China Flash PMI
    USD – Core Durable Goods due later today

    New Zealand saw further weak economic data on Friday as trade balance figures, expected to be announced at 100M actually came in at a negative of -60M, the first negative since December 2014’s data. The disappointment was tempered slightly however by the previous read being adjusted 21M higher (371M). The Kiwi fell gradually throughout the day closing at 0.6573 against the USD.

    The Markit Flash Manufacturing PMI data from China was also a contributing factor on the NZD decline, but also sent the Aussie lower. The AUDUSD pair fell 25 pips immediately on release but continued lower. The pair finished at 0.7277 and continues to set lower lows and plotting a direction towards the 70 cents mark.

    Sticking with Flash PMI, Germany and France also released data with both disappointing. France’s data came in at 49.6 against a forecast of 51.1. Data below 50 is a sign of contraction, so that is of concern and it will be interesting to see if that continues. Last month’s data showed expansion in the industry for the first time since March 2014, so whether May was merely a blip will be important to see.

    Germany’s figure missed the 52.1 forecast at 51.5 but was still in the expansionary area, which is important as Germany continues to keep the economy going amid Europe-wide turmoil.

    Monday is a relatively slow day on the news front. German Ifo Business Climate data comes out at 11:00 GMT 3 and the biggest news will be Core Durable Goods Orders from the US. That is forecast to be 0.4% when released at 15:30.

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