Positive CBI Industrial Survey

With equity markets in the US and Japan scaling new highs, the overall buoyancy has contributed to the Euro and Sterling gaining ground against the greenback. Moreover, a largely upbeat set of economic data from the US demonstrated that the economy is probably on the mend. Similarly, the German economy also continued to offer signs of ending the year on a strong footing, as positive PMI and business confidence data exemplified belief of economic growth gathering pace. Meanwhile, the ECB President downplayed reports indicating that the central bank was actively considering slashing deposit rates to negative territory. Positive signals from the CBI’s industrial trend survey continued to validate claims of a brighter economic landscape in the UK.

Pound Sterling – UK Markets

Pound Sterling – UK Markets Tracking domestic as well as global economic cues, the Pound moved steadily higher against both the US Dollar and the Euro yesterday. While UK government finances continue to remain under control, another report from the CBI showed manufacturing sector orders and output volumes to be at their highest levels since 1995. Sterling also garnered traction following the release of largely mixed Euro zone and US macro releases. With no domestic economic data on tap, the Pound is trading near yesterday’s close, momentarily touching the 1.62 mark against the greenback in today’s trading session. Sterling investors will keep a tab on economic events from across the globe today for further direction to risk appetite. Moving forward, next week’s domestic third quarter GDP numbers and consumer confidence report will be keenly followed by investors for insights into the nation’s past and future growth trajectory. Additionally, the BoE Financial Stability report will be eyed to gauge the central bank’s outlook towards the economy in the near term.

US Dollar – US Markets

US Dollar – US Markets The greenback moved broadly lower against the majors yesterday despite the reasonably upbeat macro data. The manufacturing PMI print showed that activity in the US rebounded for November, climbing to an eight-month high from a one-year low in October. Likewise, the number of people initially applying for unemployment benefits fell to the lowest level in nearly two months last week as labour market conditions continue to improve at a steady pace after last month’s partial government shutdown. However, the weaker than expected Philadelphia Fed manufacturing survey report and mixed signals given by Fed officials on QE3 tapering dampened investor sentiment towards the US Dollar yesterday. Meanwhile, the greenback is trading on a weaker footing against the majors this morning. With little on the domestic macro front to trigger risk appetite, investors will keenly follow speeches by FOMC members today for further direction. In the forthcoming week, a string of important economic data from the world’s largest economy will keep markets on their toes.

Euro – European Markets

Euro – European Markets The common currency strengthened against the greenback yesterday after the ECB President, Mario Draghi, downplayed speculation that the central bank is considering negative deposit rates in the near future. However, on the macro front, the common currency bloc continues to offer mixed signals, as yesterday’s reports showed that consumer confidence and service sector activity in the Euro zone unexpectedly slipped for November, while the French private sector contracted for the first time in three months. However, the Euro remained supported after data revealed multi-month highs for the German manufacturing and services sector activities. Meanwhile, the single currency nudged higher against its counterparts this morning following the release of German GDP numbers which were in line with expectations. Additionally, the just out German IFO business sentiment survey has shown an improvement in confidence among businesses in the nation, pointing towards a pickup in activity in the final quarter of 2013. Moving forward, a barrage of domestic economic data next week will be closely scrutinised by market participants for further insights into the region’s economic recovery.

Other Currencies – Highlights

Other Currencies – Highlights The Australian Dollar weakened against the majors yesterday following the release of an unexpectedly weak Chinese manufacturing PMI report for November. Additionally, comments from the Reserve Bank of Australia’s Governor, Glenn Stevens, that the central bank was open to currency intervention to drive the Australian Dollar lower to support the domestic economy further weighed on the Aussie Dollar. The RBA has consistently maintained low interest rates over the last few months to keep the Aussie Dollar under pressure and spur the economy, despite the surge in the housing sector. Additionally, the largely upbeat US economic data weighed on the Aussie Dollar in yesterday’s session. With little on the domestic economic calendar for the day and during next week, the Australian Dollar will take direction from news flows emanating from both sides of the Atlantic for further direction to risk appetite.