Monday marked the release of November’s German PMI (Purchasing Managers’ Index) which came out at 52.6 versus October’s 52.1, reaching a new 3-month high and beating the expected 52.2. The service sector’s activity increased strongly hitting 55.6 in November, with a 54.5 reading in September and recorded a new 14-month high. As for the Markit Flash Composite Output Index, the figure printed 54.9 for Germany this month, up from October’s 54.2.
For the USD, the week began with the hawkish statement of Fed’s Chair Yellen, which said that a rate hike is warranted if the economy will continue to improve at its present pace, especially inflation and the job sector. Most analysts foresee a gradual rate hike, rather than an abrupt one. On Tuesday was released Q3’s GDP (Gross Domestic Product) estimation, which mean a revision of the growth rate to a 2.1% qoq (quarter-on-quarter). GDP’s price index came out 1.3% qoq, higher than the expected and previous 1.2% figure. Core PCE (Personal Consumption Expenditure) matched estimation at 1.3% qoq. As for the consumer spending, considered US’s main engine for economic growth, went up 3.0%, but under the expected 3.2% growth. Exports went up 0.9%, under the expected 1.9% growth rate, while imports had a stronger growth, 2.1%. Business spending rose 9.5% in the equipment sector, but went down 71% on structures.
Tuesday also came with fresh selling pressure for the pound, the GBP/USD pair reaching session lows in 1.51’s vicinity. The major went through the day with a -0.11% drop at the daily low of 1.5107, not being able to maintain the 1.5130 support line. The main reason for yesterday’s drag seems to be Haldane and Carney’s (Bank of England’s policymakers) downbeat comments over the UK economy.
As per Haldane’s words: “Balance of risks around UK’s GDP growth and inflation skewed materially to the downside”. BoE’s Governor Carney, in his statement regarding the evolution of inflation said that the economic environment is to remain in low interest rates further ahead.
The yellow metal bounced back on Tuesday as international geopolitical grim outlooks push up the demand for safe-heavens due to Turkey shooting down a Russian jet along the Syrian border. The average movement for the trend was between $1,070 and $1,180 per ounce for yesterday, the session closing at $1,075 with a 0.73% gain for the day. We should take note that this recovery comes from last week’s staggering 5-year low at $1,064 per ounce.
