Pound (GBP) Jumps on Revised PMI Figures
The Pound (GBP) opened this week’s session on stronger footing, rallying against its peers on the back of the UK’s final services PMI reading for December.
This saw the index revised to 50 last month, up from the drop to 49.0 predicted in a preliminary estimate and resulting in the in the all-important service sector narrowly avoiding contraction at the end of 2019.
Looking to the remainder of the week, GBP investors are likely to turn their attention back to Brexit as MPs return to Westminster today, where they will resume the debate on Boris Johnson’s withdrawal deal.
Euro (EUR) Supported by Upbeat Data
The Euro (EUR) strengthened on Monday, supported by the publication of some stronger-than-expect economic data.
This was kicked off with the publication of Germany’s latest retail sales figures, which saw sale growth rocket up from -1.3% to 2.1% in November, its highest levels since January.
Further support came with the final release of the Eurozone’s services PMI, which was revised up from 52.4 to 52.8 last month.
Coming up this morning we have the release of the Eurozone’s consumer price index, with economists forecasting inflation will have accelerated from 1% to 1.3% in December. But with the European Central Bank (ECB) unlikely to purse any monetary tightening this year it may fail to buoy the Euro.
US Dollar (USD) Subdued amid Fears of Conflict between the US and Iran
The US Dollar (USD) came under pressure yesterday as escalating tensions between the US and Iran dominated market sentiment, with the ‘Greenback’ taking a dive amidst fears it could result in open conflict.
Donald Trump dialled up his rhetoric over the weekend, claiming he stood ready to hit up to 52 targets in Iran should the country retaliate in any way for the killing of Iranian general Qasem Soleimani last week.
Looking ahead, the US Dollar will continue to be influenced by the US-Iran situation today, but may find some support with the publication of the ISM non-manufacturing PMI. Which is expected to reveal growth in the US service sector accelerated in December.
Canadian Dollar (CAD) Buoyed by Rising Oil Prices
The Canadian Dollar (CAD) trended higher through Monday’s trading session, with the commodity-link currency accelerating on the back of rising oil prices, with Brent crude even briefly breaking through to $70 a barrel in response to fears of conflict in the Middle East.
Australian Dollar (AUD) Shunned amid Market Caution
The Australian Dollar (AUD) slumped to a two-week low overnight on Monday, with investors remaining wary of the risk-sensitive currency in light of tensions in the Middle East and lingering uncertainty over the US-China phase one trade deal.
New Zealand Dollar (NZD) Slips in Risk-Off Mood
The New Zealand Dollar (NZD) also weakened at the start of the week, with the ‘Kiwi’ running afoul of weakening risk-sentiment.
This downtrend may persist later this afternoon if dairy prices continue to fall in the first global dairy auction of 2020.