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Disappointing Data Leaves Main Currencies under Pressure Following Volatile Week

Pound News: UK Construction PMI Slumps and Keeps Sterling Unappealing

Since no-deal Brexit fears returned last week, investors have had little reason to buy the Pound and this has caused the British currency to fall back from its highs over the past week.

Recent UK data has done little to change that either. On Friday, UK manufacturing unexpectedly slumped and worsened concerns that UK manufacturing could see a recession. Concerns about Britain’s construction sector worsened yesterday too, as the nation’s latest construction PMI printed at just 50.6.

As the outlook for UK manufacturing and construction remain weak due to Brexit uncertainties, today’s upcoming services PMI could bolster Pound demand if it beats market expectations.

 

Euro News: German Economic Jitters and Eurozone Investor Morale Keep Euro Pressured

Despite weakness in the Euro’s rivals yesterday, the Euro was unable to benefit much. Investors remained concerned about the Eurozone’s economic outlook as a report from Sentix indicated that investor morale across the bloc was at its lowest point in four years.

Concerns about Germany’s economy are also persisting this week, following last week’s slew of underwhelming ecostats. Some analysts are becoming concerned that Germany could face a recession.

The Eurozone’s final January services and composite PMI stats will be published today, with retail sales data also on the way. If they impress investors the Euro is more likely to strengthen.

 

US Dollar News: Friday’s US Jobs and Manufacturing Stats Bolster US Dollar

Following surprisingly strong US jobs market and manufacturing stats published at the end of last week, the US Dollar remained appealing when markets opened this week. Strong Non-Farm Payroll stats made investors more confident in the strength of the US economy.

However, GBP/USD avoided its worst levels yesterday afternoon as the latest US factory orders report fell short of forecasts, seeing a bigger contraction than expected and weakening US Dollar demand slightly.

Some of this week’s most influential US data will be published today, in the form of US non-manufacturing PMI data from January. If these stats beat forecasts, the Pound may fall further against the US Dollar.

 

Canadian Dollar News: Oil Price Strength Keeps ‘Loonie’ Near Highs

While there was no fresh support for the Canadian Dollar yesterday, investors were hesitant to buy GBP/CAD back from its previous losses as global market risk-sentiment supported the ‘Loonie’.

Oil has reached 2019 highs in recent sessions, and while demand for the commodity slipped back yesterday, this was enough to prevent the Canadian Dollar from falling too far.

Canada’s key December trade balance report will be published today. The data could worsen concerns that Canada is being impacted by global trade jitters if it falls short, and this would dampen Canadian Dollar demand.

 

Australian Dollar News: Abysmal Australian Building Data Helps GBP/AUD Edge Higher

While the Pound was weak yesterday, the Australian Dollar was weaker. Australia’s December building permits stats printed at -8.4% rather than the expected 1.8%, and ANZ’s job advertisements figure fell from -0.7% to -1.7%.

On top of this, investors were hesitant to buy riskier trade-correlated currencies like the Australian Dollar amid uncertainties about China’s slowing economy. China is Australia’s biggest trade partner so the Australian Dollar is a common proxy for Chinese economic sentiment.

 

Upcoming Data

Tuesday, 5th February

00:30    Australian Trade Balance

00:30    Australian Retail Sales

03:30    Reserve Bank of Australia (RBA) Policy Decision

08:50    French Services and Composite PMI

08:55    German Services and Composite PMI

09:00    Eurozone Services and Composite PMI

09:30    UK Services and Composite PMI

10:00    Eurozone Retail Sales

13:30    Canadian Trade Balance

15:00    US Non-Manufacturing PMI

 

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To keep up to date with the Euro, visit the EUR blog in our Currency News section.

 

Michael Vaughan

Senior Currency Broker

mgv@fcgworld.co.uk

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