UK services PMI a pleasant December surprise
Today’s a busy day for global economic investors. The just released data showed that UK’s Markit services purchasing managers’ index (PMI) surprisingly advanced in December, in line with recent upbeat data releases. Moving ahead in the day, Eurozone’s producer price index along with the European Central Bank’s (ECB) monetary policy meeting accounts is due for release in a few hours. Investors will pay attention to the ECB’s meeting accounts for any further cues on the central bank’s extension of its asset-purchasing programme.
Across the Atlantic, market participants will eye ISM non-manufacturing PMI and the Markit services PMI along with the ADP employment change and weekly jobless claims data for further direction.
Pound Sterling – UK Markets
The Pound is trading lower against the shared currency and the greenback this morning. The just out data revealed that UK’s services PMI surprisingly advanced in December from November. Earlier today, a survey by the British Chambers of Commerce revealed that Britain’s economy maintained the pace of growth in the last few months of 2016, as services, manufacturing and construction firms witnessed robust growth. Also, inflation pressures grew at the quickest pace in last 20 years and has emerged as a major concern for many businesses. It further noted that the UK economy will continue to grow at a ‘modest pace’ in 2017.
Yesterday, Sterling reversed its earlier session losses and crossed the crucial 1.23 mark against the US Dollar, on the back of upbeat economic data which showed UK’s construction sector activity growing at its quickest pace in nine months for December. Additionally, figures released by the Bank of England revealed that the nation’s consumer borrowing rose in November, registering the largest monthly increase since March 2005.
US Dollar – US Markets
The US Dollar traded lower against its major peers yesterday, after minutes of the US Federal Reserve’s (Fed) December monetary policy meeting highlighted lingering uncertainty over the policy direction of the newly President-elect Donald Trump’s incoming administration. The Fed officials also indicated that the new administration’s fiscal stimulus plans could fan inflation and thereby call for a faster pace of interest rate increases. On the data front, a report by the US Mortgage Bankers Association showed that mortgage applications slightly edged up at the end of 2016.
The US Dollar is trading lower against the shared currency while it is higher versus the Pound this morning. Going ahead, market participants will focus on the US ISM non-manufacturing PMI, Markit services PMI, weekly jobless claims and ADP employment change data, all of which are scheduled to release later in the day. The number of Americans applying for fresh unemployment benefits are expected to have declined during the final week of December, suggesting strength in the nation’s labour market.
Euro – European Markets
The Euro is trading higher against the Pound and the US Dollar this morning, after data showed that Germany’s construction PMI hit a 9-month high in December, buoyed by a rise in new orders. The latest increase in new work was the second quickest on record. Ahead in the session, the ECB’s account of latest monetary policy meeting will be closely eyed. In addition to this, the Euro region’s producer price data for November will be on traders’ radar and is expected to register a smaller gain in comparison to that of the previous month.
Yesterday, the shared currency ended higher against its major peers, after the preliminary print of the Eurozone’s CPI indicated that inflation in the region advanced at its fastest annual rate in over three years in December, mainly driven by higher costs of energy. However, it still remains short of the ECB’s 2.0% target, suggesting that the central bank is unlikely to give up on its stimulus programme anytime soon. Meanwhile, Italian consumer prices rebounded in December.
Other Currencies – Highlights
The Australian Dollar is trading in positive territory against the greenback this morning, after data released earlier in the session showed that in China, Australia’s largest trading partner, private service sector activity picked up steam in December. China’s services PMI touched a 17-month high in the previous month, thus easing concerns about growth in a nation that is said to be the world’s second largest economy. Meanwhile, China’s composite PMI, that includes both manufacturing and service sector data, strengthened to a 45-month peak. Closer home, there was some good news from the Australian service sector as well. The nation’s AiG performance of services index jumped to a 17-month high in December, signalling that Australia is entering into the new year with stronger momentum.
During the previous session, the Australian dollar ended higher against its US counterpart, as the greenback weakened across the board, following minutes of the US Fed’s December monetary policy meeting. Going ahead, market participants would focus on Australia’s trade balance figures, scheduled to release tomorrow.