Eyes on US Consumer Confidence Report
The global economic calendar appears light for the final week of 2015. Among the main releases in the Euro area earlier today, Italy’s consumer confidence figures for this month indicated a slight deceleration in morale. Markets also witnessed an easing of sentiment in the nation’s accompanying business confidence report. The softness in consumer and business sentiment for December may put an obstacle in Italy’s modest rebound.
In the session ahead, more consumer confidence numbers from across the Atlantic will be worth watching, especially in light of the just ended Christmas holiday period. Expectations are that today’s report by the Conference board would provide further holiday cheer.
Pound Sterling – UK Markets
Heading into the final session of the last trading week of 2015, the Pound has lost ground against the US Dollar, with the currency pair falling below the 1.49 mark this morning. The currency pair has failed to extend its recovery momentum into this week as activity in the currency markets remains limited on a low volume session.
This week’s British economic docket before the year-end appears to be very quiet with the only exception of December’s Nationwide house prices data scheduled tomorrow for release. The economic data could have a mild impact on trading in Sterling against the US Dollar, given its importance to gauge the inflationary pressures in the nation. Nationwide’s estimates of house price growth this year have been well below those from Halifax and other sources. However, the mortgage lender had last month projected that house prices would rise by 3% to 6% in 2016, despite the likelihood of interest rate increases by the Bank of England in the middle of the next year.
US Dollar – US Markets
The US Dollar is trading moderately lower against the Euro this morning, as traders remain on the sidelines in the absence of significant macro updates. Later in the day, the US economic calendar includes Conference Board’s final gauge of consumer confidence for this year, which is expected to bounce back in December after two consecutive monthly declines. An upbeat consumer confidence reading will likely strengthen the prospects of healthy expenditure levels for the fourth quarter of this year. Also, market participants will get the latest look at home prices from the S&P/Case-Shiller report later today, with homes across the nation estimated to continue to rise for the twelve months ended in October. This year, house prices have been seen rising between 5% and 6% this year, largely because of limited housing supplies.
Yesterday, a survey by the Dallas Fed revealed that manufacturing activity in the region contracted in December, while the actual production figures for the month rose indicating a stronger output growth although demand and future prospects remain weak due to weakness in oil prices.
Euro – European Markets
The Euro has partly recovered from its losses against the greenback this morning, despite dismal economic data that came out in Europe earlier today. Data showed that the government’s measure of Italy’s consumer confidence index softened less than expected in December, slightly deviating from its upward trend seen in the recent months. Today’s data coupled with a weaker picture painted by Italy’s retail sales for October in the previous week signals that the modest recovery for the nation’s retail spending has run its course in the fourth quarter. Italy’s business confidence also worsened from a month ago in December. In addition, Spain’s retail sales growth slowed in November, falling back from a sharp acceleration in the prior month.
Later in the day, the shared currency could drift lower against the US Dollar when a slew of US economic releases such as the S&P/ Case Shiller home prices index and CB consumer confidence data fill in an otherwise quiet macroeconomic calendar. However, broad based weakness in the US Dollar could limit the losses in the Euro-greenback currency pair.
Other Currencies – Highlights
The Japanese Yen is currently trading in a tight range against the US Dollar as trading appears to remain light ahead of the New Year holiday this week. Yesterday, the Bank of Japan’s (BoJ) board member Yukitoshi Funo expressed confidence that the nation’s economy is on course to meet the central bank’s desired inflation target as companies are being encouraged to raise prices of their goods. He assured that the BoJ’s focus is on the long-term economic trend to guide monetary policy and it would refrain from expanding stimulus automatically in reaction to a slight drop in prices. However, Japanese economic data released during the weekend failed to deliver any new optimism. Japan’s industrial output dropped for the first time in three months for November and retail sales plunged, dampening prospects of recovery in the world’s third largest economy for the final quarter of this year.
Amid no economic releases scheduled in Japan today, markets eagerly await US economic data scheduled later in the day for further momentum.