Yahoo Finance Brussels and Capitol Hill to drive the GBP and the USD
Earlier in the Day:
Economic data through the Asian session included New Zealand’s November Business PMI, together with 4th quarter Tankan index numbers for Japan’s manufacturing and non-manufacturing sectors.
The Kiwi Dollar received a much needed boost following Thursday’s 1.87% tumble, with the business PMI rising from 57.2 to 57.7. The upside comes in spite of November’s business confidence sliding from -10.1 to -39.3 in figures released at the end of November. Sentiment has waned since the result of the general election, while actual business activity numbers have remained upbeat, pointing to a resilient economy.
With the new orders sub-index easing from 59.9 to 57.6 and the inventories sub-index rising from 55.6 to 57.5, there may be some concerns over firms being able to shift finished goods, though the current level for new orders suggests that demand will remain strong over the near-term.
The Kiwi Dollar moved from $0.69821 to $0.69846 upon release of the data, with the Kiwi Dollar up 0.43% to $0.7013 at the time of writing.
Out of Japan, the data was mixed, with the Tankan All Big Industry CAPEX, Big Manufacturing Outlook Index and Large Non-Manufacturers Index figures falling short of forecasts for the 4th quarter, while the Large Manufacturers Index showed that confidence had jumped to the highest level since before the global financial crisis, the index rising from 22 to 25 in the 4th quarter.
At the time of writing, the Yen was up 0.03% to ¥112.36, with the major Asian equities in the red, led by the Hang Seng which was down 1.14%.
The Day Ahead:
It’s a relatively quiet day ahead on the economic calendar, with key stats out of the Eurozone limited to the Eurozone’s October trade figures. Following Germany’s trade data released last week, this morning’s figures could add further pressure on the EUR, which has been on the back foot since the more dovish than expected ECB outlook on inflation on Thursday.
The EUR has gone fill circle this week, having fallen to $1.1769 by Monday’s close, to peak at $1.1826 on Wednesday close before easing back to $1.1783 at the time of writing. The ECB will have considered Thursday to have been a job well done in managing EUR strength in the wake of a falling Dollar.
For the Pound, things have been relatively stable considering the in party rebellions that the British Prime Minister continues to deal with. The late Wednesday parliamentary vote may support a softer Brexit, but of greater concern will be the ability of Theresa May to get her policies through.
Despite the Theresa May defeat, expectations are that talks on Brexit are to move on to the next phase, with news having hit the wires of the EU Commission acknowledging that there had been sufficient progress to move on to negotiating more sensitive areas including trade.
At the time of writing , the Pound was up just 0.04% to $1.3436 and, with no material stats scheduled for release out of the UK today, there could be further upside should the EU formally agree to move Brexit talks forward.
Across the Pond, key stats through the U.S session include December’s NY Empire State Manufacturing Index and November industrial production figures. The numbers are likely to be Dollar negative, if in line with or worse than forecasts, though focus through the session will likely to be on noise from Capitol Hill. The tax reform bill had looked to be on its way to the Oval Office for signing and is likely to get there still, but with Sen. Marco Rubio seizing the opportunity to grab the limelight, there is some anxiety ahead of the final vote expected next week.
Following market disappointment to the FED’s final meeting of the year, with inflation projections weighing on sentiment towards the rate path for next year, the Dollar is in dire need of a boost. Year-to-date, the Dollar Spot Index is down 8.44% and, while the signing of the tax reform bill won’t reverse the year’s losses, it could ease the pain.
At the time of writing, the Dollar Spot Index was up 0.10% to 93.586, with direction through the day hinged on this afternoon’s data and any gamesmanship in the Senate.
This article was originally posted on FX Empire
