Market Review - 16/12/2014 23:00GMT
Dollar falls broadly ahead of FOMC statements
The single currency strengthened against the U.S. dollar on Tuesday as release of a slew of upbeat economic reports from euro zone and Germany eased concerns over a slowdown in the bloc's economy.
Euro edged higher from Australian low at 1.2434 and then climbed to 1.2463 in Asian morning, despite subsequent sideways move ahead of European open, release of upbeat PMIs and ZEW from German and euro zone pushed price higher to a near 1-month high at 1.2569 before profit-taking emerged. Price later retreated to 1.2478 in New York morning and then moved sideways for rest of the session.
On Tuesday, Markit said its preliminary euro zone manufacturing PMI index rose to a four-month high of 50.8 in December from 50.1 in November, exceeding expectations for a rise to 50.5. The preliminary reading of the bloc's services PMI rose to 51.9 this month from 51.1 in November, compared to expectations for an increase to 51.5. Meanwhile, preliminary manufacturing PMI for Germany rose to a two-month high of 51.2 in December from a final reading of 49.5 in November, higher than economists' expectation of 50.4. However, the preliminary reading of the German services PMI slid to a 17-month low of 51.4 from a final reading of 52.1 last month, compared to expectations for an increase to 52.6.
Later, the ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 34.9 from 11.5 in November. It was the highest reading since May 2014 and exceeding the forecasts of 20.8. The current conditions index for Germany rose to 10.0 from 3.3 in November, compared to expectations of 5.7. However, Eurozone ZEW economic sentiment dropped to 10.0 in December from 11.5 in November.
Versus the Japanese yen, dollar tumbled from Australian high of 118.01 to a fresh near 1-month low at 115.58 in Tuesday's European session as demand for the yen was boosted due to a selloff in Nikkei after data showing that factory activity in China contracted for the first time in seven months in December. In addition, deepening concern that the global economy is faltering after oil prices slumped and Russia's ruble fell to a record also increased demand for safe haven yen. Later, short-covering emerged and lifted dollar to 116.57 in New York morning and then higher to 117.76 after data showed the U.S. manufacturing sector continued to expand in December, despite the fact that growth rate hitting an 11-month low.
The preliminary reading of China's HSBC manufacturing PMI came in at 49.5, down from a final reading of 50.0 in November and below forecasts of 49.9.
In New York session, Markit said its preliminarily U.S. manufacturing PMI index fell to 53.7 in December from November's 54.8, matching the 2014 January low when severe weather impacted economic activity. Market expected the reading to be 55.2.
Cable swung wildly on Tuesday before rallying to a fresh near 3-week high of 1.5785. The British pound briefly tanked to an intra-day low of 1.5610 in European morning after data showed that consumer price inflation in the U.K. rose at the slowest rate in 12 years in November, however, comments from BoE's Carney downplayed the weak inflation and cable rallied in tandem with euro to 1.5785 before retreating to 1.5715 in New York morning and then moved sideways for rest of the session.
U.K. Office for National Statistics said on Tuesday that the annual rate of CPI in the country slowed to 1.0% last month from 1.3% in November (lowest rate of inflation since September 2002). CPI fell 0.3% on a month-over-month basis after a 0.1% increase in October, while core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.2% last month, down from 1.2% in October.
Wednesday will see the release of New Zealand's Current Account, Japan's Trade Balance, exports, imports, Switzeland's SNB's Quarterly Bulletin, ZEW Investor Sentiment, UK's BoE Meeting Minutes and MPC Vote Outcome, Average Earnings, Claimant Count Change, ILO Unemployment, Eurozone's Inflation data, Labour Costs, Canada's Wholesale trade, U.S.'s CPI, Current Account, FOMC Rate Decision, only a breach of 118.00/01 would signal a low has possibly been made and bring stronger gain to 118.98/06 and then towards 119.56.
Dollar falls broadly ahead of FOMC statements
The single currency strengthened against the U.S. dollar on Tuesday as release of a slew of upbeat economic reports from euro zone and Germany eased concerns over a slowdown in the bloc's economy.
Euro edged higher from Australian low at 1.2434 and then climbed to 1.2463 in Asian morning, despite subsequent sideways move ahead of European open, release of upbeat PMIs and ZEW from German and euro zone pushed price higher to a near 1-month high at 1.2569 before profit-taking emerged. Price later retreated to 1.2478 in New York morning and then moved sideways for rest of the session.
On Tuesday, Markit said its preliminary euro zone manufacturing PMI index rose to a four-month high of 50.8 in December from 50.1 in November, exceeding expectations for a rise to 50.5. The preliminary reading of the bloc's services PMI rose to 51.9 this month from 51.1 in November, compared to expectations for an increase to 51.5. Meanwhile, preliminary manufacturing PMI for Germany rose to a two-month high of 51.2 in December from a final reading of 49.5 in November, higher than economists' expectation of 50.4. However, the preliminary reading of the German services PMI slid to a 17-month low of 51.4 from a final reading of 52.1 last month, compared to expectations for an increase to 52.6.
Later, the ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 34.9 from 11.5 in November. It was the highest reading since May 2014 and exceeding the forecasts of 20.8. The current conditions index for Germany rose to 10.0 from 3.3 in November, compared to expectations of 5.7. However, Eurozone ZEW economic sentiment dropped to 10.0 in December from 11.5 in November.
Versus the Japanese yen, dollar tumbled from Australian high of 118.01 to a fresh near 1-month low at 115.58 in Tuesday's European session as demand for the yen was boosted due to a selloff in Nikkei after data showing that factory activity in China contracted for the first time in seven months in December. In addition, deepening concern that the global economy is faltering after oil prices slumped and Russia's ruble fell to a record also increased demand for safe haven yen. Later, short-covering emerged and lifted dollar to 116.57 in New York morning and then higher to 117.76 after data showed the U.S. manufacturing sector continued to expand in December, despite the fact that growth rate hitting an 11-month low.
The preliminary reading of China's HSBC manufacturing PMI came in at 49.5, down from a final reading of 50.0 in November and below forecasts of 49.9.
In New York session, Markit said its preliminarily U.S. manufacturing PMI index fell to 53.7 in December from November's 54.8, matching the 2014 January low when severe weather impacted economic activity. Market expected the reading to be 55.2.
Cable swung wildly on Tuesday before rallying to a fresh near 3-week high of 1.5785. The British pound briefly tanked to an intra-day low of 1.5610 in European morning after data showed that consumer price inflation in the U.K. rose at the slowest rate in 12 years in November, however, comments from BoE's Carney downplayed the weak inflation and cable rallied in tandem with euro to 1.5785 before retreating to 1.5715 in New York morning and then moved sideways for rest of the session.
U.K. Office for National Statistics said on Tuesday that the annual rate of CPI in the country slowed to 1.0% last month from 1.3% in November (lowest rate of inflation since September 2002). CPI fell 0.3% on a month-over-month basis after a 0.1% increase in October, while core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.2% last month, down from 1.2% in October.
Wednesday will see the release of New Zealand's Current Account, Japan's Trade Balance, exports, imports, Switzeland's SNB's Quarterly Bulletin, ZEW Investor Sentiment, UK's BoE Meeting Minutes and MPC Vote Outcome, Average Earnings, Claimant Count Change, ILO Unemployment, Eurozone's Inflation data, Labour Costs, Canada's Wholesale trade, U.S.'s CPI, Current Account, FOMC Rate Decision, only a breach of 118.00/01 would signal a low has possibly been made and bring stronger gain to 118.98/06 and then towards 119.56.
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