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EUR – The Euro remains relatively weak as monetary stimulus is expected to be increased in Europe.
GBP - Sterling has initially been weakened this morning following poor manufacturing data.
USD – The Dollar remains strong as expectations for an interest rate rise intensifies.
There was a very quiet start to the week. Overnight ANZ released a business confidence survey for New Zealand, which came in better than expected. As you would expect the New Zealand Dollar strengthened. The Bank of Japan’s Governor Kuroda also spoke yesterday, and reiterated that Japan will continue to push for its inflation target of 2% - weakening the Japanese Yen as further stimulus is expected.
There was very little significant data from the UK, Eurozone and the US yesterday. Despite the US Dollar reaching the best levels since April against Sterling, across the day Sterling gained ground against the US Dollar and Euro.
China’s manufacturing PMI and Caixin manufacturing PMI both came out this morning. The manufacturing PMI was negative and the Caixin reading also showing contraction, however this reading was better than expected.
Australia opted to keep interest rates at a record low overnight. However the Reserve Bank of Australia reiterated that further stimulus could be introduced in the foreseeable future. Initially the Australian Dollar has strengthened though. Governor Stevens is also speaking this evening
Across the morning manufacturing data has been released from Europe. In France, Spain and Germany the data was all positive. However as a whole, the data came in line with expectations across Europe.
This morning the UK’s manufacturing data is being released, and this has come in worse than expected initially weakening Sterling. The Bank of England carried out stress tests on UK banks today. Banks were informed that they will likely need to hold an additional £10bn as a buffer starting in March, however this did not directly impact Sterling.
Canada’s GDP is being released this afternoon and is expected to be the same as previous.
The Global Dairy Trade Index is being released this afternoon, and this will likely have an impact on the New Zealand Dollar.
There is expected to be improvement in the US’s ISM manufacturing PMI this afternoon. There will be more scrutiny than usual over the US’s manufacturing, as there is possibility of an interest rate rise on the 16th December.
Tuesday 01 December 2015, 11:15am
EUR – The euro remains pressured as markets look to the ECB for a potential QE extension this week.
GBP - Loses ground against the dollar, but holds firm against the EUR.
USD – Continues to strengthen as data supports the dollar ahead of the December rate decision.
A fairly quiet week in the markets with the US off on Thursday for Thanksgiving last week. Following a poor start to the week the with dismal readings for manufacturing and home sales, the dollar picked up momentum throughout the week with a plethora of economic data beating estimates, including GDP, durable goods, and personal consumption expenditure.
The week started off a little more positively for the Eurozone as manufacturing and services data surprised to the upside for November, helping the euro to pick up some ground. The EU financial stability review saw the European Central Bank warn that chances of an "abrupt risk reversal" are increasing due to Chinese turmoil and the withdrawal of monetary stimulus in the US. The euro fell as expectations of further easing from the ECB increase.
The UK's inflation report disappointed last week as BoE Governor, Mark Carney stating that UK rates will remain low for some time, though he still believes a rate hike will happen mid-2016 and cutting interest rates is still a possibility. George Osbourne’s spending review and Autumn statement had growth forecasts revised higher in 2016 and also predicted a £10bn surplus by 2020, meaning the government will be raising more than it has spent. Also, third quarter growth in the UK hit target on Friday.
The main event this week will be the ECB meeting on Thursday, where we could see a drop in the deposit rate and an extension of the current QE programme, which could see the Euro falter. Today, markets will look for German inflation to pick up from a flat reading last month.
The UK’s outlook on inflation and economic recovery will be discussed on Tuesday as the Bank of England releases its Financial Stability report. Today, we see the release of second tier data with money supply and consumer credit data due.
The all-important non-farm payrolls figure and unemployment rate will be watched even more closely this week as the market looks towards the Fed for a potential rate rise in December. We will also hear from four Fed members this week including Fed Chair, Janet Yellen and as such we may hear some further clues on what to expect from the December Fed meeting. Also due this week, the Fed beige book reports on the US economy and factory orders.
The Bank Of Canada will meet on Wednesday to set the interest rate, which is expected to be kept on hold at 0.5%, likely waiting for the US to make the first move.
The RBA (Reserve Bank of Australia) interest rate decision will be released on Tuesday with Governor Glenn Stevens also speaking. The central bank is expected to keep the rate on hold at 2%.
Monday 30 November 2015, 10:09am
GBP- Preliminary GDP figures for Q3 are in focus as the key event for the day
USD- US trading resumes after the Thanksgiving Bank Holiday yesterday
EUR- EU Financial Stability report could add to forward guidance
Yesterday was extremely quiet for data releases due to the US Bank Holiday for Thanksgiving. In the Eurozone, Spanish GDP for the 3rd Quarter met expectations but failed to make any significant impact on the exchange rates which remained flat over the course of the day. The Eurozone Money Supply figures recorded the second highest level since 2009, suggesting that the benefits of QE may be starting to trickle through. Overnight, Japan released its inflation data which met and exceeded expectations. This may signal that Japan has seen the worst of its lacklustre inflation this year. The Japanese Yen strengthened slightly off the back of this news.
At 09:30, the UK will release its preliminary GDP figures for the 3rd Quarter. Expectations are for the data to come in line with previous readings. Any divergence away from these figures may impact the rates today.
Trading resumes in the US today on Black Friday which may cause the US Dollar to strengthen.
At 11:00, the EU Financial Stability Review is published. It is likely that this report will again mention the headwinds that the Eurozone faces from emerging markets and its continued sluggish growth. Analysts will be looking for forward guidance on the ECB action next week regarding interest rate and QE levels.
Friday 27 November 2015, 09:43am
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