Greek Presidential Elections in Focus
A light global macroeconomic calendar today, following last week’s festive holiday, is unlikely to bring any major volatility in currency markets. However, Sterling investors will remain focused on the final round of Greek Presidential elections as any unfavourable outcome for the current ruling party might heighten concerns among market participants. Going forward, traders will keep tabs on Friday’s manufacturing PMI report in the UK for further direction to risk appetite.
Across the Atlantic, after last week’s final GDP numbers indicated an upward revision to the nation’s economic growth for the third quarter due to strong consumer spending levels, investors keenly await tomorrow’s consumer confidence report to gain a better insight into the domestic spending trend for the last quarter of 2014.
Pound Sterling – UK Markets
The Pound gained ground against the common currency in Friday’s trading session. Over the weekend, the BoE’s Chief Economist, Andrew Haldane, indicated that the central bank has set up a special taskforce to keep watch on internet and social networking websites to gauge Britain's economic recovery going forward. He further stated that such a move might help the BoE to get a better updated trend about the nation’s economic health, especially after data collected over the internet helped the central bank earlier this year to take precautionary measures to curb the overheating trend in Britain’s housing market.
With little on the domestic macroeconomic front, Sterling investors will keenly eye the final voting round of Presidential elections in Greece later today for further direction to the Pound-Euro pair. Going forward, a light economic calendar in the UK this week is likely to keep Sterling investors on the edge ahead of Friday’s Markit manufacturing PMI report in the UK. The report is expected to shed more light on the nation’s manufacturing activity for December, especially amid no signs of an end to Europe’s macroeconomic troubles.
US Dollar – US Markets
The greenback is trading in a tight range against the Euro and the Pound this morning. With no important macro updates in the US today, market participants will keenly eye the outcome of Greece’s third round of Presidential elections later today for further direction to the Euro-US Dollar pair. Going forward, traders will eye the Conference Board’s report in the US scheduled tomorrow to gauge the health of consumer confidence for December, particularly after the revised Reuters/Michigan consumer morale reading for this month surpassed market estimates. Considering that domestic spending levels have played a crucial role in boosting the nation’s economic growth for the third quarter, an upbeat consumer confidence reading tomorrow is likely to strengthen prospects of robust expenditure levels for the final quarter of 2014. Additionally, the ISM’s manufacturing PMI survey in the US scheduled later this week is anticipated to attract considerable attention among investors.
Following the Christmas holiday last week, the US Dollar gained ground against the common currency in Friday’s quiet trading session.
Euro – European Markets
The Euro is trading in a tight range against the Pound this morning ahead of the outcome of the third voting round of Greece’s Presidential elections. An outcome not in favour of the current government is likely to result in snap general elections which might lead to transfer of power to the opposition. Such a shift in the nation’s political arena is likely to raise concerns among investors as the opposition seeks to favour anti-austerity measures which could result in Greece’s exit from the European Union. Moving ahead, with a quiet week in terms of economic releases in the Euro zone, traders will eye speeches from various ECB officials for hints over the possibilities of a sovereign bond buying programme in the region.
Meanwhile, the Euro lost ground against the greenback on Friday and dropped below the 1.22 mark. Over the weekend, two eminent German officials, Jens Weidmann and Christoph Schmidt, hinted that the nation’s economic performance is anticipated to improve next year and reiterated that a sovereign bond purchase programme is not a viable solution for Euro zone’s macro troubles.
Other Currencies – Highlights
The Japanese Yen showed little reaction to a raft of mixed domestic economic data released early Friday morning and remained range bound against the greenback. Data revealed that Japan’s consumer price inflation eased for a fifth straight month for November amid a weakness in global crude oil prices. Additionally, the report showed an easing trend in the nation’s core inflation rate as real wages registered its steepest drop in five years, stoking concerns over the nation’s economic prospects going forward. Meanwhile, another report revealed that the unemployment rate in Japan remained unchanged for November, but an improvement in the job-to-applicant ratio suggested that conditions in the nation’s labour market are improving.
The Japanese Yen pared some of its early session gains against the US Dollar this morning. With a light domestic economic calendar this week, investors in the Japanese Yen are likely to focus on the ISM manufacturing PMI reading in the US scheduled later this week for further direction.