Pound (GBP) Rises as Manufacturing and Services Output Improves
Sterling firmed on Friday following the release of better-than-expected UK manufacturing and services PMIs.
Markit economist Christ Williamson said of the result: ‘The survey is indicative of GDP rising at a quarterly rate of approximately 0.2% in January, representing a welcome revival of growth after the malaise seen in the closing months of 2019. Hiring has also picked up.’
While there isn’t much on the UK data calendar today, the Bank of England’s (BoE) first rate decision of 2020 is looming and speculation about whether or not the central bank will cut interest rates is likely to drive GBP exchange rates for much of the week.
Euro (EUR) Weakened by Disappointing IFO Data
The Euro came under pressure at the start of the week after the German IFO indexes fell short of forecasts.
Both the business climate and expectations measures fell unexpectedly in January.
The next Eurozone data of note is the German GfK consumer confidence index, due for publication on Wednesday.
Decline in Risk-Appetite Supports US Dollar
The US Dollar was bolstered by a positive Flash PMI on Friday and is deriving further support from a general decline in risk appetite.
Markets have turned risk-off amid rising concerns over the coronavirus. There are now over 2700 confirmed cases in China.
The US Dollar could extend gains this afternoon following the publication of US new home sales data. Economists have forecast that new home sales rose 1.6% on the month.
Canadian Dollar Softens Thanks to BOC Growth Warning
The Canadian Dollar failed to derive much benefit from domestic retail sales data before the weekend.
Sales were up 0.9% on the year, as forecast. This followed a -1.1% slump the previous month.
Retail sales excluding auto only increased by 0.2%, less than the 0.8% forecast.
Declining risk appetite weighed on the ‘Loonie’.
This week’s biggest Canadian data is the nation’s growth figures, due out on Friday.
Australian Dollar Slides as Risk-Appetite Declines
The Australian Dollar racked up sizable losses against its rivals as markets reopened after the weekend.
With concerns about the spread of the coronavirus increasing investors turned away from high-risk assets like the ‘Aussie’.
AUD could recoup some losses overnight if the NAB business confidence index shows improvement.
GBP/NZD Rises 0.9%
The Pound was able to advance by almost 1% against the New Zealand Dollar (NZD) on Monday as investors shied away from higher risk currencies.
The NZ data to look out for this week includes domestic trade balance and consumer confidence figures.