8th January 2018 Market Update
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?? GBP – Last week, Sterling maintained its position against the euro and dollar, this was despite construction and manufacturing PMIs coming in below expectations. Despite coming in below expectations, manufacturing figures are at very high levels, as a weak pound has boosted this sector. Services scraped above expectations at 54.2.
This week is relatively light on the data front for the UK, as only manufacturing production figures are released this week, and they are expected to rise to 0.3%. Theresa May is expected to complete her cabinet reshuffle, and that will implicate the future direction of the UK’s government.
?? EUR – Last week, Europe’s manufacturing figures came out in line with expectations with a very strong reading of 60.6. Services PMI also followed on with a strong reading on Thursday to help the euro maintain its relative strength. Despite this strong growth, Europe continued its battle with inflation as Core CPI came in below expectations at 0.9%. There is a lack of data out this week, so the focus for Europe will be on the ongoing coalition talks in Germany. Merkel seems confident of forming a coalition, and if one is formed this could help the euro.
?? USD – Jobs figures were the focus for the US last week. ADP non-farm employment figures came in above expectations at 250k, however the dollar went back under pressure Friday afternoon as the Non-Farm Employment Change came in significantly below expectations at 148k. Average earnings remained persistently low in the US at 0.3%.
Like the UK, the US also has a relatively quiet week. On Thursday PPI is expected to be released at 0.2%, and then Friday CPI and retail sales are being released. CPI is expected to contract to 0.2%, while core figures are expected to rise to 0.2%. Retail sales and core retail sales are both expected to contract, which could put the US dollar under further pressure.
08/01/2017: BOC Business Outlook Survey
10/01/2017: Manufacturing Production m/m
10/01/2017: Crude Oil Inventories
11/01/2017: PPI m/m
12/01/2017: CPI m/m, Core CPI m/m, Core Retail Sales m/m, Retail Sales m/m
11/01/2017: Retail Sales m/m
Summary: The dollar remains under pressure, and non-farm employment figures were particularly weak which further added to this. Sterling remains in a relatively strong position, despite last week’s construction and manufacturing PMIs coming in below expectations. This Friday there will be a real focus on the US, with CPI and retail sales being released. Germany will also be in the spotlight, as Angela Merkel looks to hopefully form a coalition. If successful, this could strengthen the euro.
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