US Dollar Weakens on ISM Manufacturing Report, Aussie Gains as RBA Maintains Rates - 2.4.2013

Yesterday at the US session the ISM Manufacturing disappointed expectations by registering 51.3 in March, a decrease of 2.9% from February reading at 54.2 according to ISM. Market consensus was to remain the same at 54.2 however it did not, weighing on the US dollar that lose broadly across the board. The USDJPY kept sliding following ISM report to reach support at 92.55 with NIKKEI 225 falling by 1.08% losing for second consecutive day. Nonetheless the focus is on BOJ monetary decision, expected on Thursday with first time governor pro-easing Kuroda, where asset purchases are expected to be extended to longer term maturity as well as increase of the size of the program. Australian dollar against the US dollar also gained on weaker than expected ISM report rising above resistance at 1.0421. After the RBA decision that an “accommodative stance of monetary policy is appropriate” the currency pair held upside until cap at 1.0478, advancing by 0.89% since yesterday low at 1.0385. In addition the RBA decided to maintain rates at 3% as earlier easing decisions are having expansionary effect on the economy with risks softening internationally. Elsewhere, the Euro was also in gaining mood against the greenback surging as high as 1.2877, despite losses increase for depositors in largest Cypriot bank. At the same time Italian president Giorgio Napolitano makes last attempts to find common ground between political parties and form a government. Looking at the latest CFTC report, Euro net short position increased to $7.9 bln against the US dollar while only Aussie is net long among US dollar’s major counterparties, holding a net long position of $8.9 bln