Forex Trading Library

Forex Afternoon Sum-up

0 177

Key Sum-up Notes

  • Australia GDP q/q slows, rising 0.3% vs. 0.7% expectations; GDP y/y soft at 2.7% vs. 3.1%
  • Switzerland GDP q/q 0.6% above estimates, GDP y/y up 1.9%
  • Spanish, French services PMI falls below estimates at 52.7 and 47.9 respectively; German PMI services unchanged at 52.1; Italian services PMI beats estimates 51.8
  • Eurozone composite PMI lower at 51.1, services PMI down 51.1
  • UK services PMI beats estimates rising 58.6 vs. 56.5
  • Eurozone retail sales m/m down 0.4% vs. 0.5% estimates; retail sales y/y down 1.4% vs. 1.6% estimates
  • UK Autumn forecast statement provides revised GDP and inflation forecasts
  • US ADP Employment change rise less than forecast, 208k vs. 222k estimates
  • Unit labor costs q/q -1% vs. -0.2%; nonfarm productivity rises less than expected at 2.3%

The Australian dollar opened weaker this morning weighed down by a weaker than expected GDP growth numbers and a broadly stronger Greenback. China’s PMI data which were mostly in line with expectations without much deviation could not help support the Aussie.

The Euro single currency followed through on its weaker theme starting today as PMI services across Europe came in mixed but mostly softer. Retail sales data was also lower than expected. The Euro was trading down -0.4% against the Greenback in anticipation of tomorrow’s ECB meeting, touching down to 2-year lows. The current trend is most likely reflecting a pricing in of the QE plan which the ECB is expected to announce within the next few months starting first with corporate bonds followed by sovereign bond purchases.

The British sterling managed to hold ground and was briefly supported by a stronger than expected services PMI. With the exception of the Greenback, the Sterling managed to gain across the board, gaining against the Swiss Franc, Yen and the weaker commodity currencies, AUD, NZD and the CAD ahead of the UK Government’s autumn forecast statement which didn’t really impact the Sterling much.  The key points were:

  • UK Jobless rate to stabilize near 5.3% with 2015 unemployment rate expectations cut to 5.4% from 6.5%
  • GDP expectations: 2.4% in 2015, 2.2% in 2016. 2014 GDP forecast revised upwards to 3% vs. 2.7%
  • Wage growth to rise before inflation. 2015 inflation expect to be at 1.5%

The Greenback was stronger from the start of today’s trading session as the Dollar index hit a 5 and half year highs near 88.89 as the buck moved to the US trading session with the broad based strength ahead of the ADP and ISM data.

ADP employment change saw 208k new jobs being added, less than forecasts of 222k while previous month’s (October 2014) ADP data revised upwards to 233k, up from 230k as reported previously. There was a bit bad news as the unit labor costs q/q declined -1% and nonfarm productivity rose less than expected at 2.3%. The Greenback eased a bit but there are still more of US data to come later in the day.

Other key events scheduled for later in the day include the Bank of Canada’s interest rate decision, which is expected to remain unchanged and a speech by BoC Governor Poloz, where markets are expecting to hear the Central Banker’s review on the Canadian dollar in the backdrop of the crude oil prices. ISM non manufacturing PMI is also due with expectations of a rise to 57.5, after the index fell for two straight months. Crude oil inventories are also expected to be released later, followed by speech from Fed’s Plosser, Brainard and Beige book data.

Leave A Reply

Your email address will not be published.