Tag Archive: gbp

US Preview: ISM January Manufacturing PMI likely to drop

FXStreet (Mumbai) – The ISM manufacturing PMI will be released today at 15.00 GMT. The index is likely to come in at 48.0. The ISM’s Manufacturing PMI was revised down to 48 from an initially reported 48.2 in December 2015, marking the lowest reading since June 2009 on account of sharp decline in new orders, production, employment and raw materials inventories subindexes. December’s ISM PMI was significantly lower than November’s 48.6.

Business Confidence in the United States averaged 52.79 percent from 1948 until 2015. It had reached an all time high of 77.50 percent in July of 1950 and a record low of 29.40 percent in May 1980.

All indicators assessing manufacturing growth in the US released in in the previous months have revealed a slowdown in this sector. The manufacturing sector in has suffered in the recent times on account of slowing global growth as well as the strong US dollar which has led to lower demand from overseas. Low oil price has also been an important factor that has checked increase in manufacturing activity.

U.S. economic growth slowed down sharply in the fourth quarter with economy growing 0.7 per cent hit by rising inventory which resulted in a loss of appetite among manufacturers to restock. This impacted overall factory activity. Strong dollar and weak global economic outlook hurt exporters. The economy grew at a 1.6 per cent pace excluding inventories and trade indicating the huge negative impact of the slowing down of manufacturing sector trade on GDP. Inventory in Q4 was worth $68.6 billion, more than what economists had estimated and subtracted 0.45 percentage point from Q4 GDP growth. The data indicated inventory will continue to be a drag on growth in Q1 of 2016.

Moreover, lower oil prices can be expected to have hurt profit margins of energy firms that over the last few months have been compelled to reduce their capital spending budget. Oil prices have fallen 70 per cent from their peak in June 2014 and have hit multi year lows in the recent past. This affected investment in the energy sector.

Research Team at Danske Bank however sees a stabilization of the index in January. Stabilization or slight improvement in data will likely help to diminish a fear of recession.

The ISM manufacturing PMI will be released today at 15.00 GMT. The index is likely to come in at 48.0. The ISM’s Manufacturing PMI was revised down to 48 from an initially reported 48.2 in December 2015, marking the lowest reading since June 2009 on account of sharp decline in new orders, production, employment and raw materials inventories subindexes. December’s ISM PMI was significantly lower than November’s 48.6.

(Market News Provided by FXstreet)

USD/CAD off highs, back near 1.4030

FXStreet (Edinburgh) – The Canadian dollar is now recovering part of the daily drop vs. its American counterpart, with USD/CAD deflating to the 1.4030 area.

USD/CAD attention to US calendar, WTI

Spot keeps swaying around the performance of crude oil prices, with the barrel of West Texas Intermediate now intensifying the daily decline to levels below the $33.00 mark.

In the meantime, the pair is managing to put further distance from the recent area of multi-week lows near the 1.3900 handle ahead of the US data releases due later: ISM Manufacturing, Markit’s PMI and the speech by Fed’s S.Fischer. On the Canadian side, RBC’s manufacturing PMI is expected.

USD/CAD significant levels

As of writing the pair is up 0.18% at 1.4032 and a surpass of 1.4230 (20-day sma) would open the door to 1.4327 (high Jan.26) and then 1.4692 (high Jan.20). On the other hand, the immediate support lines up at 1.3866 (3-month uptrend) ahead of 1.3812 (low Jan.4) and finally 1.3543 (100-day sma).

The Canadian dollar is now recovering part of the daily drop vs. its American counterpart, with USD/CAD deflating to the 1.4030 area…

(Market News Provided by FXstreet)

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NZD/USD losing sight of 0.65 handle

FXStreet (Mumbai) – NZD/USD tracks the losses in its OZ neighbour and languishes near session lows on the back of ongoing sell-off across the higher-yielding assets on resurfacing China economic concerns.

NZD/USD drops below hourly 200-SMA at 0.6471

Currently, the NZD/USD pair trades -0.33% lower at fresh session lows of 0.6461, having faced fresh sellers at 0.6485 region in early Europe. The Kiwi came under renewed selling pressure this session after the European stocks dived deeper into the red and curbed further the appetite for risk/higher-yielding currencies.

The NZD/USD pair remains weak so far this Monday as the renewed concerns over the health of New Zealand’s biggest trading partner, China, flagged by poor manufacturing data weighed on the Kiwi as well as on the oil prices.

Focus now shifts towards a slew of US economic releases in the session ahead, while the sentiment around the oil prices and stocks continue to dominate.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.6516/20 (Jan 28 High/ Daily R3), above which it could extend gains to 0.6563 (Jan 21 High) levels. To the downside immediate support might be located at 0.6417/12 (Jan 28 & 27 Low) and from there to 0.6379 (Jan 15 Low).

NZD/USD tracks the losses in its OZ neighbour and languishes near session lows on the back of ongoing sell-off across the higher-yielding assets on resurfacing China economic concerns.

(Market News Provided by FXstreet)

US ISM: Index to linger in contractionary territory – TDS

FXStreet (Delhi) – Research Team at TDS, suggests that the US manufacturing sector remains in the midst of a protracted recession, and January should mark the third consecutive sub-50 print on the headline ISM manufacturing sector indicator.

Key Quotes

“This will be the first instance of this since the economic recession ended in 2009. TD expects the headline index to decline to 48.0 in January from 48.2, reflecting a further weakening in manufacturing sector momentum. Production activity should decline further as US producers cut back on their output to reduce inventories.

The key forward looking indicators are also expected to weaken further, with new orders backlog slipping. The new orders to inventory sub-index, a key gauge of future production, should also decline, pointing to a further decline in manufacturing sector activity in early 2016. The drop in the headline index is broadly in line with the wide array of weak regional PMIs, which have remained firmly in contractionary territory. As we move deeper into the year, with the headwinds from the strong dollar abate and the global recovery regaining its footing, we expect the US manufacturing sector to rebound.

Risks to the forecast

The risks to our call are fairly balanced. From the regional PMIs perspective, the sharp rebound in the Chicago PMI well above the 50 mark does provide a counterbalance to the other regional indicators which have all remained firmly in contractionary territory. The Markit manufacturing PMI also slipped, but remained in expansionary territory.

Foreign Exchange

With expectations already so low, we see an asymmetric risk around this report that leaves the USD more sensitive to a positive surprise. The cross to watch will be EURUSD, which would fall under further pressure following today’s decent data run (GDP, ECI and Chicago PMI). We do not see much in the way of support sub-1.08 but reckon that 1.0720 will be the first level to watch for support. In the event that the ISM disappoints, we see EURUSD gains capped to 1.0938.”

Research Team at TDS, suggests that the US manufacturing sector remains in the midst of a protracted recession, and January should mark the third consecutive sub-50 print on the headline ISM manufacturing sector indicator.

(Market News Provided by FXstreet)

European stock markets mid session: stocks traded lower on the mixed manufacturing PMI data from the Eurozone, on falling oil prices and on the weak Chinese manufacturing PMI data

Stock indices traded lower on the mixed manufacturing PMI data from the Eurozone, on falling oil prices and on the weak Chinese manufacturing PMI data. The Chinese manufacturing PMI fell to 49.4 in January from 49.7 in December, according to the Chinese government on Monday. It was the lowest reading since August 2012. Analysts had expected the index to decline to 49.6.

The Chinese Markit/Caixin manufacturing PMI rose to 48.4 in January from 48.2 in December. The increase was driven by a softer drop in new orders.

Markit Economics released its final manufacturing purchasing managers’ index (PMI) for the Eurozone on Monday. Eurozone’s final manufacturing purchasing managers’ index (PMI) dropped to 52.2 in January from 53.2 in December, in line with the preliminary reading.

The drop was driven by a softer growth in output and new orders.

“Growth of order books, exports and output all slowed. If the slowdown in business activity wasn’t enough to worry policymakers, prices charged by producers fell at the fastest rate for a year to spur further concern about deflation becoming ingrained,” Chris Williamson, Chief Economist at Markit said.

Germany’s final manufacturing purchasing managers’ index (PMI) fell to 52.3 in January from 53.2 in December, up from the preliminary reading of 52.1.

The index was driven by a weaker rise in production and new orders. Lower energy and raw material prices weighed on input costs.

France’s final manufacturing purchasing managers’ index (PMI) declined to 50.0 in January from 51.4 in December, in line with the preliminary reading.

The index was driven by a drop in new orders, and input and output prices.

Markit Economics released its manufacturing purchasing managers’ index (PMI) for the U.K. on Monday. The Markit/Chartered Institute of Procurement & Supply manufacturing PMI for the U.K. increased to 52.9 in January from 52.1 in December, exceeding expectations for a rise to 51.8. December’s figure was revised up from 51.9.

The increase was driven by a rise in domestic demand.

“The UK manufacturing sector registered an uptick in its rate of expansion at the start of 2016, shrugging off a number of potential headwinds, ranging from global financial market volatility to localised flooding in the North of the country. The domestic market remains the key growth driver,” Markit’s Senior Economist Rob Dobson said.

The Bank of England (BoE) released its number of mortgages approvals for the U.K. on Monday. The number of mortgages approvals in the U.K. was up to 70,837 in December from 70,424 in November, exceeding expectations for a decrease to 69,600. November’s figure was revised up from 70,410.

Consumer credit in the U.K. rose by £1.169 billion in December, missing expectations for an £1.300 billion increase, after a £1.479 billion gain in November. November’s figure was revised down from £1.476 billion.

Current figures:

Name Price Change Change %

FTSE 100 6,058.63 -25.16 -0.41 %

DAX 9,730.64 -67.47 -0.69 %

CAC 40 4,386.51 -30.51 -0.69 %

BoE: Inflation report to downgrade growth and inflation forecasts – Lloyds Bank

FXStreet (Delhi) – Research Team at Lloyds Bank, notes that the recent speeches from BoE Governor Carney and other MPC members, as well as the minutes of the January policy meeting, have emphasised the accumulation of downside risks to domestic activity and inflation since the November Inflation Report (IR).

Key Quotes

“Some of this reflects international developments. The preliminary estimate of Q4 GDP puts growth at a near-trend 0.5% q/q, while annual headline inflation remains close to zero as energy base effects soften against the backdrop of the nearly 40% fall in oil prices since the November IR.

But there have also been concerns about the unexpected slowdown in the pace of wage growth despite the continuing robustness of employment and a stronger-than-anticipated dip in headline unemployment. Despite the upward impacts of a 4% weakening in trade-weighted sterling since the November report, further downgrades to projections for GDP growth and inflation over 2016 and 2017 are expected.

Nonetheless, concerns about the supply-side capacity of the economy, possibly stemming from a decline in average working hours over the last year, could see November’s expectation of an inflation overshoot at the end of the two-year policy horizon remain intact. This would suggest that the current market forecast that the first increase in the Bank Rate will not take place until 2018 is overdone. Nonetheless, we do not expect Governor Carney to provide a strong steer on the timing at his press conference.”

Research Team at Lloyds Bank, notes that the recent speeches from BoE Governor Carney and other MPC members, as well as the minutes of the January policy meeting, have emphasised the accumulation of downside risks to domestic activity and inflation since the November Inflation Report (IR).

(Market News Provided by FXstreet)