2nd February 2018 Market Update
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?? GBP – UK manufacturing hit a 7-month low yesterday amid rising costs for raw materials, suggesting signs of a slowdown. Sterling took a hit initially, falling off the highs of the day seen earlier in the morning. Whilst GBP/EUR continued to fall throughout the course of the day; against the US dollar we saw the pound retrace the losses attempting to recapture the high seen earlier on the day.
Construction PMI’s are due out today with analysts expecting production to increase in January from December.
On the week so far, the pound has generally enjoyed a good run, particularly against the US dollar, with the high of last week now in the sight of traders.
?? EUR – Eurozone manufacturing came in line with expectations for the month of January, once again adding appetite for the euro with the currency attempting to make a new high since December 2014.
Nothing major on the economic docket for the Eurozone today but a big influence on the euro today could be seen from the US job figures later in the afternoon.
?? USD – After showing signs of recovery earlier in the week, the US dollar continued its downward trend despite strong manufacturing figures from data agencies Markit and ISM. Even comments made by the International Monetary Fund that they expect new Fed Chair, Jerome Powell, to continue the Fed’s gradual rate tightening failed to abate the fall in the dollar.
The key data today will be January’s unemployment figures, wage growth and the infamous nonfarm payroll print. Overall the markets expect some positive figures which could well bring about a long overdue correction on the dollar.
09:30am: Construction PMI: Expected to increase to 56.2
13:30pm: Nonfarm Payrolls: Expected to rise to 180,000
13:30pm: Average Earnings: Expected to increase to 2.6%
13:30pm: Unemployment Rate: Expected to remain at 4.1%
Summary: Sterling continued to power on against the dollar despite sluggish manufacturing figures with the currency attempting the highs that we saw last week.
Over in Europe, manufacturing has started strong for 2018 causing GBP/EUR to fall.
And the US dollar continued its downward trend despite encouraging manufacturing figures.
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