Busy Economic Calendar for US & Europe
The economic calendar in the US and Euro zone stands busy with a slew of major economic releases today. In the Euro region, German retail sales unexpectedly declined in December, adding to worries that the Euro zone’s economic recovery is failing to gather pace. Separately, in France, economic growth slightly slowed for the fourth quarter, but rose on an annual basis. Meanwhile, consumer confidence in Britain unexpectedly climbed for January, defying worries over turmoil in global markets.
Across the Atlantic, investor focus will be on preliminary growth figures for the fourth quarter which are expected to ease after rising sharply in the third quarter. Also, the consumer sentiment index by the University of Michigan and Chicago Purchasing Managers’ Index will be in the spotlight.
Pound Sterling – UK Markets
The Pound is trading on a stronger footing against the shared currency this morning. Earlier in the day, the UK’s consumer sentiment index tracked by the market research firm, GfK, reported an unexpected rise for January as markets shrugged off concerns over the turmoil in domestic and overseas markets that overshadowed the start of the year. The surge in the sentiment barometer in the UK was partly attributed to a rise in post-Christmas bargain-hungry shoppers. Meanwhile, next month’s figures could provide interesting readings, considering the turmoil experienced by global markets this year.
With no significant releases in the UK today, currency traders will shift their focus to the publications scheduled in the week ahead. Markit Manufacturing PMI for January will attract significant market attention at the start of the new week. Expectations remain faint after manufacturing activity in the UK slowed in the previous two consecutive months. Also in the spotlight will be the consumer credit report that will disclose the amount of money individuals borrowed in December along with the crucial mortgage approvals data for the last month.
US Dollar – US Markets
The greenback traded lower against most of the major currencies yesterday, after the release of mixed economic data in the US. Orders for long-lasting US manufactured goods dropped sharply in December as lower oil prices and weaker global demand put added pressure on factories, a fresh sign that the nation’s economic growth softened towards the end of 2015. This reading adds to the growing evidence that the US manufacturing sector is contracting. Pending home sales in the US were almost flat, rising less than expected for December which suggests moderate home-buying activity ahead. Meanwhile, initial jobless claims in the US fell more than expected in the previous week, indicating that the jobs market continued to remain in a healthy state.
The US Dollar is trading broadly higher against its key currency counterparts this morning. The recent dismal data in the US has raised fears that the nation’s growth figures scheduled for release later in the day could be disappointing. Expectations are that economic growth in the US would ease in the fourth quarter after posting strong gains in the previous quarter.
Euro – European Markets
The Euro is trading on a weaker footing against the Pound and the US Dollar this morning and is trading near the 1.09 mark. The single currency came under pressure after German retail sales unexpectedly declined in December, marking a weak end to the year. The fall in sales suggested that private consumption which has been a pillar of support for the Euro zone’s major economy might lose some steam in the final quarter of 2015. Also, mild weather conditions in the country weighed on retail sales, with a fall in demand for winter clothing amid a warmer-than-usual winter in December. Additionally, preliminary GDP reading indicated that growth in the second largest economy of the Euro region slightly slowed in the fourth quarter due to a fall in consumer spending caused by unusually mild weather and the terror attack on Paris.
Later in the day, investor focus will be on the Euro zone’s preliminary reading of consumer price inflation which is anticipated to gain momentum at the start of the New Year. Euro zone’s CPI is more likely to take a cue from a rise in German consumer prices for January.
Other Currencies – Highlights
The Japanese Yen is trading on a weaker footing against the US Dollar today after the Bank of Japan introduced negative interest rates to revive growth and fight against deflationary pressures in the world’s third largest economy. Meanwhile, it decided to keep its asset purchase programme intact at ¥80.0 trillion per year. Earlier today, in economic news, a government report showed that consumer price inflation cooled in Japan amid lower oil prices. Additionally, overall household spending declined more than expected for December as households preferred to save gains resulting from weaker oil prices. Separately, in a report by the Ministry of Internal Affairs and Communications, data showed that the unemployment rate in Japan remained flat in December.
The US Dollar - Japanese Yen currency pair traded slightly lower yesterday after the resignation of Japan’s economy minister Akira Amari over bribery allegations.