UK Manufacturing Continues to Expand
Sterling showed some strength in the run-up to today’s UK manufacturing PMI data and the report just released has not disappointed investors. Data revealed that the nation’s manufacturing activity rose surprisingly for November. However, another report indicated that mortgage approvals in the UK declined for October, in response to tighter mortgage lending measures introduced by the BoE earlier this year.
Across the Atlantic, today’s ISM manufacturing PMI survey will be closely watched and is anticipated to show that the pace of manufacturing activity in the US slowed for November. In the Euro zone, the final manufacturing PMI reading in Germany was downwardly revised for November, thereby shifting focus to the ECB policy meeting scheduled later this week.
Pound Sterling – UK Markets
The just out Markit manufacturing PMI survey has showed that the pace of manufacturing sector activity in the UK improved unexpectedly for November despite economic conditions in the Euro zone remaining weak. Separately, another report showed that consumers in the UK borrowed more than expected for October. Considering that retail sales in the UK grew at a robust pace for October and the latest BoE minutes indicated a pick-up in the nation’s wage earnings, traders will keep an eye on macro updates going forward to gauge the health of domestic spending. Later this week, investors will eye the services PMI report, especially considering that the services sector contributes a major portion to the nation’s economic activity. Additionally, the BoE policy meeting scheduled later this week is likely to attract considerable attention among traders.
Meanwhile, Sterling is trading on a firmer footing against the greenback and has moved closer to the 1.57 mark. With the ISM manufacturing PMI report scheduled in the US later today, investors in the Pound-US Dollar pair are likely to remain on their toes.
US Dollar – US Markets
The US Dollar is trading marginally lower against its key counterparts this morning. Market participants will keep a tab on today’s ISM manufacturing PMI report which is expected to show that the pace of manufacturing sector activity in the US eased for November, but remained well above the expansion mark. However, with the pace of domestic activity showing signs of deceleration last month and core durable orders dropping unexpectedly for October, the prospects of a slowdown in the US economy during the last quarter cannot be ruled out. Additionally, speeches by a few Fed officials later today are likely to attract considerable attention among traders, particularly amid rising uncertainty over the timing of an interest rate rise in the US. Going forward, the main focus among investors is likely to remain on this week’s US non-farm payrolls report for November, given the importance of the labour market to the US Fed’s policy guidance.
The greenback gained ground against the Pound in Friday’s trading session amid a light domestic macro calendar.
Euro – European Markets
The revised manufacturing PMI numbers released across key European nations earlier today showed that the pace of manufacturing sector activity in the Euro zone slowed for November, while German manufacturing activity contracted. The slowdown was mainly led by the recent sanctions imposed on Russia and weak demand across emerging economies. Meanwhile, the common currency has showed little reaction against the majors to today’s revised PMI numbers. Market participants will now eye macro updates in Germany going forward, as the recent mixed economic data continues to fuel uncertainty over the nation’s economic prospects.
In Friday’s trading session, the Euro lost ground against the greenback. The preliminary data released in the Euro zone revealed that consumer price inflation in the region eased in line with market estimates for November. Considering the recent fall in global oil prices and the threat it poses to Euro zone’s weak inflation, investors will keep a tab on the ECB’s policy meeting scheduled later this week as prospects of further stimulus measures in the Euro bloc continue to strengthen.
Other Currencies – Highlights
In Friday’s trading session, the ANZ survey showed that morale among firms in New Zealand improved for November. However, the Kiwi Dollar remained under pressure against the greenback following OPEC’s decision last week that it would not reduce its crude oil output. Separately, the Reserve Bank of New Zealand Governor, Graeme Wheeler, indicated over the weekend that an accommodative monetary policy across developed nations was causing asset prices in emerging economies to boom.
Meanwhile, the Kiwi Dollar reversed some of its previous session losses and rose above the 0.78 level against the greenback today. With the ISM manufacturing PMI report in the US scheduled later today, the New Zealand Dollar-US Dollar pair is likely to witness some volatility. With little on the domestic economic calendar this week, the US labour market report scheduled on Friday is expected to attract considerable attention among market participants.