German Macro Data in Spotlight
With a light economic calendar in the UK today, Sterling investors are likely to keep an eye on tomorrow’s GfK consumer confidence report in Britain which is anticipated to show an improvement for November. Across the Atlantic, yesterday’s downbeat economic reports weighed on the greenback against the majors. Data showed that core durable orders dropped unexpectedly for October amid reluctance among firms to make new investments.
With US markets closed today on account of the Thanksgiving Day holiday, market focus is expected to remain on German preliminary consumer price inflation and GfK consumer confidence data due later today. Both releases will be crucial in helping market participants to gauge the macro health of Europe’s largest economy for the last quarter of 2014.
Pound Sterling – UK Markets
With little on the domestic macroeconomic front, the Pound is trading in a tight range against the greenback but briefly rose above the 1.58 level this morning. Going forward, market participants will keep a tab on tomorrow’s GfK report in the UK which is anticipated to show a slight improvement in confidence among consumers. With recent signs of a pick-up in domestic demand amid weak commodity prices and intense competition among retailers, an upside surprise in tomorrow’s confidence reading cannot be ruled out.
In yesterday’s trading session, the Pound gained ground against the greenback and moved above the 1.57 mark following the release of the revised UK GDP report. Data showed that the pace of economic growth was in line with the preliminary estimate for the third quarter of 2014. The report further revealed that private consumption ticked higher as domestic wages improved during the third quarter. Traders will closely watch for further developments in the consumer spending pattern, especially after the minutes of the BoE’s latest policy meeting revealed that wage growth in Britain is likely to improve during the end of 2014.
US Dollar – US Markets
The greenback lost ground against the majors yesterday following weak economic data in the US. Although data showed that durable goods orders grew unexpectedly for October, the rise was mainly led by high military spending and as business investments in the nation remained weak. Additionally, the revised Reuters/Michigan survey showed that confidence among consumers improved less than expected for November as consumers remained pessimistic about inflation expectations for the year ahead. Additionally, weak initial jobless claims and pending home sales data stoked fears of a potential slowdown in the US economy amid a weakness in global macro conditions. It would be interesting to see whether the economy is able to maintain the momentum seen in the last few quarters, especially considering yesterday’s weak macro data in the world’s largest economy.
The greenback is trading in a tight range against its key peers this morning. With no crucial macro releases today on account of the Thanksgiving Day holiday in the US, investors will eye today’s crucial German inflation report for further direction to the Euro-US Dollar pair.
Euro – European Markets
Data released earlier today revealed that the number of unemployed people in Germany declined more than expected for November. However, the Euro showed little reaction against the majors as traders look forward to other crucial macro releases in the nation later today. The GfK report is expected to show that morale among consumers in Germany improved for December. Traders will keep a tab on this report to get a better insight into the health of domestic spending for the last quarter of 2014. Additionally, the preliminary consumer prices report in Germany scheduled later today is expected to show an easing trend for November, especially after the nation’s headline inflation slipped unexpectedly last month. Amid prospects of a deflationary threat hovering over the Euro zone, a downward trend in German inflation is likely to boost prospects of further easing in the region. Furthermore, a speech by the ECB Chief and confidence indices in the Euro zone scheduled later today will attract market attention.
Yesterday, the Euro traded firmer against the greenback and rose above the 1.25 level following the release of downbeat US macro data.
Other Currencies – Highlights
The Japanese Yen is trading higher against the greenback this morning ahead of today’s crucial macro data in Japan. The consumer price inflation data in Japan is expected to show a fifth consecutive month of deceleration for October, especially after the April sales tax hike left a deeper dent on the nation’s economy. However, considering that the Bank of Japan remains committed in achieving the nation’s inflation target of 2%, investors will eye inflation data going forward to gauge the impact of the recently announced stimulus measures in Japan. Separately, other reports are expected to show that household spending remained subdued and the unemployment rate in Japan remained unchanged for October.
Going forward, market participants expect the Japanese Yen to remain broadly under pressure against its major peers, particularly after recent survey polls showed mixed results for the upcoming snap elections in Japan.