Key Forex Afternoon Notes:
- Australia manufacturing index 49 vs. 46.9 previously
- Japan final manufacturing PMI 52.2 vs. 52.1
- China HSBC final manufacturing PMI 49.7 vs. 49.8
- Spain manufacturing PMI 54.7 vs. 54.1
- Switzerland manufacturing PMI 48.2 vs. 50.6
- French manufacturing PMI 49.9 vs. 48.8
- Germany manufacturing PMI 50.9 vs. 51
- Italy manufacturing PMI 49.2 vs. 49.5
- Eurozone manufacturing PMI 51 unchanged
- UK manufacturing PMI 53 vs. 52.7
- US personal income m/m 0.3% vs. 0.2%; personal spending m/m -0.3% vs. -0.2%; PCE price index core y/y 1.3% vs. 1.3%; PCE price index y/y 0.7% vs. 0.8%;
Later:
- US manufacturing PMI
- US ISM manufacturing PMI
- US construction spending m/m
The currency markets opened on a quiet note on Monday as speculators gear up for a high event week with lots of fundamentals from across the major regions. The Asian trading session was relatively quiet this morning with no major news on the tap. Japan’s final manufacturing PMI for January managed to best estimates rising modestly to 52.2, while Australia’s manufacturing index fell below expectations at 49. Most of the Asian currencies were trading off the broad based theme, as the US Dollar opened the week below last week’s high.
The European session was packed with Eurozone manufacturing PMI which was broadly mixed. While Spain continued to beat estimates from last week’s better than expected GDP numbers to today’s manufacturing PMI, Germany’s PMI however eased albeit modestly to 50.9 vs. estimates of 51. The overall Eurozone manufacturing PMI was unchanged at 51.
The Euro did not react much on the news but was seen mostly trading within the range. Against the US Dollar, the Euro was seen trading near 1.125 – 1.13 levels. During the early European session, there were comments from ECB’s Coeure on the QE plans. He was heard stating that it was too early to comment on the effectiveness of the quantitative easing plans and that it remains an open ended purchase despite the initial time table of ending the ECB’s QE in September 2016. He declined to comment on the funding for Greek banks whose government is currently in a stalemate in regards to its austerity plans based on the initial lending agreements.
From the UK, manufacturing PMI beat estimates modestly at 53, but the Sterling was seen weaker on the news. The Cable fell to the lows of 1.50 despite the modest increase in manufacturing. EURGBP managed to rally to make an intraday high of 0.756 levels ahead of the US trading session.
The US trading session kicked off with the PCE data, which came out broadly mixed. While personal income rose 0.3% month on month, personal spending declined -0.3%. The PCE price index, which is also the Fed’s preferred measure of inflation declined on the headline while Core PCE was lower at 1.3%, from 1.4% last month. The markets however did not react much on the news ahead of more US data including the manufacturing PMI’s.
