Construction Activity Gains Pace in Britain
Today’s Markit survey has revealed that the pace of activity in Britain’s construction sector improved unexpectedly for January. In light of recent signs suggesting that the UK housing market may be cooling, today’s data has offered a surprise to investors. Moving ahead, traders will keep tabs on tomorrow’s services PMI data in the UK to better gauge the nation’s macro health, particularly considering that the services sector plays a key role in contributing towards the economy’s growth.
Across the Atlantic, after the soft ISM manufacturing PMI survey raised concerns over the economy’s health for the first month of 2015, market participants will eye tomorrow’s ISM non-manufacturing PMI reading for further direction. Additionally, today’s factory orders data in the US today is likely to attract attention among greenback investors.
The Reserve Bank of Australia in its policy meeting held earlier today surprisingly lowered its benchmark cash rate to 2.25% from 2.50%. AU$ has fallen against all Majors in early trading.
Pound Sterling – UK Markets
Data just out has shown that construction PMI in the UK rose surprisingly for January, well above the previous reading. With Britain’s construction sector activity showing signs of improvement despite the a cooling housing market, market participants now look forward to any signs of pick up in the nation’s housing market activity. Additionally, with last week’s UK data indicating an unexpected rise in the number of mortgage approvals for December, traders will eye more cues to gain an insight into the nation’s real estate sector health. Going forward, tomorrow’s services PMI report will attract significant attention among Sterling investors to better gauge Britain’s macro health for January, especially considering that the economy is dominated by the services sector.
In yesterday’s trading session, the Pound lost ground against the greenback despite the Markit report revealing that activity in the UK manufacturing sector improved surprisingly for January. The upswing was led by an increase in export orders and a fall in factory input prices which boosted purchases among domestic manufacturers.
US Dollar – US Markets
The ISM survey released yesterday showed that manufacturing PMI in the US eased more than anticipated for January, to its lowest level since February 2014. The survey indicated a slowdown in the hiring pace across US manufacturing firms and revealed signs of weakness in fresh orders and export orders. Considering that the US macro growth missed its preliminary estimates for the last quarter of 2014, this survey raises additional concerns over the economy’s resilience to the subdued global conditions. Furthermore, another report revealed that construction spending in the US rebounded less than expected for December. The US Dollar slipped against the Japanese Yen but held its ground against the Euro and Sterling in yesterday’s trading session. Going forward, traders will keep a tab on the ISM non-manufacturing PMI reading tomorrow to gauge the overall health of the private sector in January.
This morning, the greenback is trading on a firmer footing against most its key counterparts. Traders will eye today’s US factory orders data for December which is expected to show a drop in manufacturers’ orders for a fifth straight month.
Euro – European Markets
The common currency is trading in tight range against the majors this morning ahead of December’s producer price inflation report scheduled in the Euro zone today. This print is expected to show that factory input prices continued to fall for a twelfth straight month and registered its sharpest drop since December 2009 amid falling oil prices. In light of yesterday’s speech by the ECB Governing Council Member, Ewald Nowotny, where he hinted that Euro bloc’s inflation is likely to remain in the negative territory for some time to come, investors will keenly look forward to the ECB’s quantitative easing measures beginning from the next month in the Euro zone. Meanwhile, with no other noteworthy economic triggers scheduled today, tomorrow’s revised Euro zone services PMI data will be eyed for further direction.
Yesterday, Euro zone’s revised Markit report showed that activity in the manufacturing sector improved in line with its preliminary estimate for January. However, Germany’s manufacturing sector bucked the overall trend, as the PMI reading was revised downwards, thus weighing on hopes that the overall trend in the nation is improving.
Other Currencies – Highlights
The Reserve Bank of Australia in its policy meeting held earlier today surprisingly lowered its benchmark cash rate to 2.25% from 2.50%. This unexpected decision weighed on the Australian Dollar and caused the Aussie Dollar-US Dollar pair to fall below the 0.77 mark. The RBA Governor, Glenn Stevens, in the post meeting policy statement, revealed that the accommodation in the central bank’s policy stance was needed to support the below trend macro growth in Australia. Additionally, the statement justified the RBA’s decision and expressed concerns over the weak labour market and indicated that inflation was expected to remain within the central bank’s target. Separately, a report revealed that trade deficit in Australia narrowed more than expected for December, amid an increase in exports and a cheaper oil import bill.
Going forward, market participants will keep a tab on today’s services performance index in Australia for January. Additionally, with US labour market report scheduled later this week, traders in the Aussie Dollar-US Dollar pair are likely to remain interested.