Several PMI readings announced in Eurozone today
After following the monetary policy decisions of 3 top central banks, investors end the week pondering some important macroeconomic global data points. For starters, private sector activity in the Eurozone and Germany dropped in September, and at the same time, the French manufacturing and services purchasing managers’ indices (PMI) exceeded expectations.
There are no economic releases for the UK today, but in America the preliminary manufacturing PMI reading for September is due.
Pound Sterling – UK Markets
The Pound is trading weaker against the US Dollar and Euro this morning. There are no economic releases scheduled today. Next week brings some crucial data points from Britain into focus, including the nation’s consumer confidence, final estimate of gross domestic product for the second quarter and mortgage approvals data.
Yesterday, Sterling ended higher against its major peers after Bank of England’s (BoE) policymaker, Kristin Forbes, said that Brexit has had a “less stormy” impact on the British economy than initially expected and that the country will not require additional monetary policy easing in the future. Separately, the BoE financial policy committee meeting minutes suggested a “challenging” outlook for UK’s financial stability as the nation faces “uncertainty and adjustment” following the Brexit vote. On the data front, Britain’s CBI industrial trends survey registered a steady reading for headline orders in September.
US Dollar – US Markets
The US Dollar is trading higher against the Pound and Euro this morning. Market participants only have 1 economic data point to focus on today - manufacturing PMI data for September, which is expected to register a decline.
Yesterday, the greenback weakened against most of the key peers, following the Federal Reserve’s vote to hold off on raising interest rate this month. On the data front, a report by the US labour department showed that the number of Americans filing for unemployment benefits surprisingly declined last week to reach its lowest level since July 2016, indicating sustained labour market strength in the economy. US existing home sales fell in August, dropping for the second consecutive month, due to a shortage of inventory that is boosting home prices faster than the pace of wage growth. And the Chicago Fed national activity index dropped sharply in August, pointing towards subdued economic growth.
Euro – European Markets
The Euro is trading mixed against the greenback and the Pound this morning. Various preliminary manufacturing and services PMI data points crossed the wires a few hours back. In the broader Euro area, while manufacturing activity advanced above expectations, the region’s services sector registered a drop for September. In Germany, which is the Euro region’s largest economy, private sector growth slowed to a 16-month low level this month, hampered by a near stagnation of services sector output. However, the nation’s manufacturing PMI rose to a 3-month high level in September. Meanwhile in France, business activity grew faster than anticipated this month to notch its fastest pace in over a year, as both manufacturing and service PMI’s surpassed expectations. On the other hand, French economy contracted during the second quarter, as the country continues to grapple with unemployment and a drop in tourist numbers – France is 1 of the most visited countries in the world.
Yesterday, a flash reading of the Eurozone’s consumer confidence index slightly improved in line with investor expectations for September.
Other Currencies – Highlights
The Canadian Dollar has reversed its previous session gains and is trading lower against the greenback this morning, recording its first drop this week. Today is a pretty important day for Canada. There are 2 crucial economic data points scheduled for release later in the day, namely the nation’s retail sales and consumer price index. Canada’s retail sales registered a drop in July and is expected to post a turnaround in its July reading. Further, the nation’s consumer prices recorded its first decline for this year in July and is likely to post a slight rebound for August. Canada’s GDP print for July is up for release next week.
Separately, the Organisation for Economic Co-operation and Development slashed Canada’s growth forecast for this year and the next and also warned of the risk of a price correction in its inflated real estate market. Further, the Bank of Canada’s Governor, Stephen Poloz, indicated that the low interest rate environment will persist for a prolonged period.