The first official trading day of the year did not see much volatility despite a few economic releases. That said, the markets continued to trade based off the broader themes. The Euro continued to weaken against the Greenback, but the biggest decline came from the Cable. GBPUSD saw a reactive sell off when manufacturing PMI for the month of December hit a 7-month low at 52.5, below estimates of 53.7.
Weaker fundamentals from the US such as manufacturing PMI’s which failed to beat estimates and a lower than expecting monthly construction spending failed to stall the decline in the Cable, which looks very bearish at current levels.
Today marks the start of a full trading week but economic data is fairly limited to the Asian and European sessions, with the US session seeing absolutely no releases, with the exception of total vehicle sales.
The important event for today will be the German CPI which is expected to rise to 0.1%, after last month remained flat at 0%. With Spain already in deflation, posting negative CPI of -1.1%, the German CPI data could likely tilt the markets, should the headline CPI reading fall below estimates and into negative territory.
UK’s construction PMI will also be the focus which, the markets expect to be softer than last month at 59.2. Another weaker reading in construction PMI could likely see the cable hold on to its bearish momentum.
Fundamentals Recap – January 2, 2015
• Spain manufacturing PMI 53.8 vs. 54.9
• Italy manufacturing PMI 48.4 vs. 49.6
• UK Manufacturing PMI 52.5 vs. 53.7
• US Final manufacturing PMI 53.9 vs. 54.1; ISM Manufacturing 55.5 vs. 57.6
• US monthly construction spending -0.3% vs. 0.4%
Fundamentals – January 5, 2015
• Australia AIG manufacturing index 46.9 vs. 50.1 previously
• Japan final manufacturing PMI 52 vs. 52.1 previously
• German preliminary CPI m/m expected to be soft at 0.1%
• Switzerland SVME PMI to rise to 52.9
• Eurozone Sentix investor confidence to ease to -0.9
• UK construction PMI to be soft at 59.2