GBP falls on weak Manufacturing and Industrial production

Today’s Economic Events

• Japan current account 1.42Tn vs. 1.52Tn
• Japan Bank lending y/y 2.20% vs. 2.30% previously
• New Zealand ANZ commodity prices m/m -1.80% vs. -5.60%
• Japan consumer confidence 42.7 vs. 42.3
• Japan economy watchers sentiment 48.7 vs. 46.7
• UK Manufacturing production m/m -0.40% vs. 0.10%; y/y -1.20% vs. -0.80%
• UK Industrial production -0.70% vs. 0.0%; y/y 0.90% vs. 1.70%
• ECB’s Praet Speech
• BoJ Governor, Kuroda Speech
• FOMC Member Fischer Speech
• US NFIB Small business index 95.2 vs. 95.4

Coming up

• BoE Gov. Carney speech
• US JOLTS job openings
• US IBD/TIPP Economic optimism

The Asian session got off to a mixed start with the Nikkei closing down -2.71% while the Shanghai Composite gained 0.21% for the day. The uncertainty in the markets saw an initial sell-off in the commodity risk currencies. AUDUSD fell to intraday lows of 0.6945 well into the European session before managing to reverse its losses. The currency pair is now up 0.27% at the time of writing, trading near 0.7015. The NZDUSD was, however, weaker, down -0.12% but was seen to be faring better after initially falling to the lows of 0.6532 before pushing higher modestly. Economic data from New Zealand saw the commodity prices falling -1.80% against -5.60% estimates. However, the data didn’t help the Kiwi much early on.

The Japanese Yen is trading soft today with USDJPY gaining 0.16% for the day. The Dollar is trading near 117.94 after an initial decline to an intraday low of 117.3. The Yen was seen giving back its gains into the start of the European trading session as risk aversion sentiment showed signs of easing. Early in the day, data from Japan saw the current account falling to 1.42 Trillion Yen against estimates of 1.52 Trillion Yen while the bank lending posted a soft growth of 2.20% falling short of 2.30%. Consumer confidence data from Japan showed a soft reading of 42.7 against estimates of 42.3 while the economy watchers sentiment was up at 48.7 against estimates of 46.7.

The European trading session got underway with the Euro trading on the back foot. EURUSD is down -0.19% for the day, trading at 1.083 after a failed attempt to rally which saw EURUSD post an intraday high at 1.089 before the single currency gave up its gains against the Dollar. There were no major economic releases from the Eurozone today.

The UK’s manufacturing and industrial production numbers were the main event for the day, which disappointed. Manufacturing production in the UK fell -0.40% in November on a monthly basis against estimates of market expectations of seeing a 0.10% bounce in growth. Industrial production including Oil and gas exploration and extraction fell -0.70% for the month after rising 0.10% previously. On an annualized basis, UK’s manufacturing production was down -1.20, below estimates of 0.0% while Industrial production was down 0.90%. The Pound plunged on the data with GBPUSD trading just a few pips shy of 1.44 handle and is down -0.80% for the day. On the equity front, the German DAX is up 2.48% while the London FTSE100 is up 1.80%.

[Tweet “The Pound plunged on the data with GBPUSD trading just a few pips shy of 1.44 handle and is down -0.80% for the day”]

In the US, pre-market data from the futures shows a better opening today with the Dow Futures up 1.01% and the S&P500 up 1.06% gaining 164 and 20.25 points respectively with the earnings season in focus. The NY trading session is relatively quiet today with speeches from BoE’s Carney and Fed Member Fischer due to speak. Some volatility could be expected on Carney’s comments ahead of the BoE’s monetary policy meeting due later in the week.

On the commodities front, Crude Oil prices are showing signs of a rebound after prices briefly flirted near the $30.5 levels. For the day, WTI Crude Oil is up 1.38%, trading near $31.55 a barrel. Gold prices remain weak, down -0.68% for the day trading at $1086 an ounce and breaking below yesterday’s low. The declines come about after the precious metal saw a strong rally last week on market uncertainty and ongoing geopolitical developments in the Middle-East.