UK Construction Activity Slows, German CPI Eyed
Today’s Markit construction PMI data revealed that construction sector activity in the UK decelerated more than expected for December, although it remained well above the expansion mark. However, with signs of weakness in the sector and indications that housing activity in the nation is slowing, investors are likely to remain concerned. Moving ahead, traders will eye the services PMI data in the UK tomorrow, to better gauge the nation’s overall macro health.
Across the Atlantic, market participants will eye US labour market data and minutes of the Fed’s most recent policy meeting later this week for more clarity on the country’s macro health. Later today, Euro investors will keep a tab on Germany’s preliminary consumer price inflation data for December to gauge the threat of deflation in the region.
Pound Sterling – UK Markets
Data just out indicated that construction PMI for December eased for a third straight month in the UK. With signs of a slowdown apparent in Britain’s housing market activity lately, especially after the BoE introduced tougher lending measures last year, a consecutive deceleration in the nation’s construction sector activity is likely to raise some concerns among Sterling investors. Meanwhile, the Pound continues to trade on a weaker footing against the greenback. Going forward, market participants will eye the Markit services PMI report in the UK tomorrow to better gauge Britain’s overall macro health for December. Later this week, investors will keenly eye the BoE’s first policy meeting for 2015 to gain an insight into the timing of an interest rate rise in the UK, particularly amid prospects that the central bank might start raising its key interest rate during the latter half of this year.
On Friday, the Pound dropped below the 1.55 mark against the US Dollar after the Markit report showed that manufacturing performance in Britain’s manufacturing activity expanded at a slower rate for December.
US Dollar – US Markets
On Friday, market participants showed little reaction to the downbeat US ISM manufacturing PMI report and the greenback continued to trade on a firmer footing against its key peers. The report showed that the pace of manufacturing activity in the US slowed more than anticipated for December, to its lowest level in the past six months. Considering that manufacturing sector activity in the US slowed for a second consecutive month, traders will now closely track upcoming manufacturing indicators to gauge whether the world’s largest economy remains resilient to subdued global macro conditions. Separately, another survey indicated that construction spending in the US eased unexpectedly for November, thereby stoking concerns about the nation’s housing market recovery for the last quarter of 2014.
The US Dollar is trading higher against the majors this morning. With a light economic calendar in the US today, investors will look forward to the minutes of the US Fed’s most recent policy meeting and the nation’s crucial labour market data for December later this week for further direction.
Euro – European Markets
The just out Sentix reading revealed that confidence among investors in the Euro zone improved more than expected for January. However, traders remain cautious ahead of a snap election in Greece and the Euro remained under pressure against the greenback this morning after the Euro-US Dollar pair opened below the 1.20 mark. Later today, market participants look forward to December’s preliminary consumer price inflation report in Germany, which is anticipated to show a second consecutive easing amid falling global crude oil prices. Considering that the ECB President, Mario Draghi, hinted last week that a prolonged period of low inflation is concerning, another downward movement in inflation in Europe’s largest economy is likely to boost prospects of a sovereign bond purchase programme in the region. Going forward, traders will eye the Euro bloc’s consumer price inflation numbers later this week to better gauge the region’s inflation health.
The Euro lost major ground against the greenback in Friday’s trading session after the ECB President reiterated that the central bank stands ready for implementing further stimulus measures in the Euro zone.
Other Currencies – Highlights
The Canadian Dollar lost ground against the greenback in Friday’s trading session and the US Dollar Canadian pair rose above the 1.17 mark. The RBC manufacturing PMI survey released on Friday revealed that the pace of manufacturing sector activity in Canada slowed for December as domestic production and new orders rose at a slower pace. However, the report showed that hiring pace across the nation remained supported last month. Meanwhile, the Canadian Dollar showed little reaction to the positive data after traders flocked to safe haven assets as manufacturing performance across most of the major global economies remained subdued for December.
The Canadian Dollar is trading in a tight range against the greenback this morning after the US Dollar-Canadian Dollar pair reversed some of its early session gains and dropped below the 1.18 level. With little on the domestic macroeconomic front today, market participants will keep a tab on labour market reports in Canada and in the US later this week for further direction.