Euro and Eurozone equity indices make gains, due to positive PMI data, USA job creation stalls, whilst the ISM non manufacturing and services reading misses forecast
During Wednesday’s trading sessions, GBP/USD traded in a tight range, with a bullish bias, oscillating between the daily pivot point and the first level of resistance, as investors and FX traders analysed the latest news regarding the Brexit situation. Leaders of the two main political parties met to apparently find a method to break the deadlock and prevent the U.K. crashing out of the E.U. on Friday April 12th. The meeting between Corbyn and May achieved nothing, raising suspicions that for May it was simply a clumsy, theatrical, political exercise, to apportion and share blame, for her government’s failure.
At 21:50pm U.K. time, GPB/USD traded up 0.21% at 1.315, sterling also made significant gains versus JPY, although the gains versus both currencies were due to weakness in USD and JPY, as opposed to sterling strength. EUR/GBP traded in a narrow range, close to the daily P.P, with no directional bias, up 0.08%, at 0.853. The latest Markit PMI for services for the U.K. came in significantly below the Reuters forecast, registering a fall in March, from 51.3 to 48.9, just below the level separating contraction from expansion, it’s a concerning statistic, for an economy 80% dependent on services, including retail services. Naturally, the excuse analysts were quick to use involved Brexit, however, the reasons might relate to consumer confidence and a lack of disposable income.
The euro made gains versus several of its peers, most notably versus USD up 0.27% and versus JPY up 0.44%, as a slew of Markit PMIs published in the morning session on Wednesday, caused optimism in the E.Z. to rise. Germany’s services PMI came in at 55.4, a reading which suggested that any concerns, regarding the overall health of German economy, have been exaggerated. Eurozone equities also rose, Germany’s DAX closed up 1.70% and France’s CAC up 0.84%.
The economic calendar, relating to the USA economy, produced some surprising results on Wednesday afternoon. The ADP private payroll data, a precursor to the latest NFP jobs data due to be published on Friday April 5th, came in below forecast at 129k for March, falling from 197k in February. The latest non manufacturing services composite reading, came in at 56.1, falling from 59.7. This high impact reading is closely monitored by FX analysts and traders, based on ISM being a highly respected analytics firms, whilst the reading also provides an excellent insight into the overall health of the USA economy.
USA equity indices whipsawed and oscillated in wide ranges, with bullish bias, partly as a consequence of the bearish data, with the optimism surrounding the China-USA talks, preventing any falls from gathering momentum. The SPX closed up 0.21% and the NASDAQ up 0.60%, whilst USD also whipsawed in wide ranges versus peer currencies such as JPY. USD/JPY whipsawed in a wide range, between the daily pivot point and R2, before settling close to R1, up 0.12% on the day, as the New York session came to a close. USD/CHF closed down -0.10%.
Thursday’s key economic calendar events begins before the London-European session opens, as the latest German factory orders data is published at 7:00am U.K. time. The Reuters forecast is for a figure of 0.30% growth month on month for February, which would represent a significant improvement from the -2.60% recorded for January. This release could move the market for the euro and the DAX, particularly if the reading misses, or beats the forecast. At 12:30pm U.K. time, the minutes relating to the March ECB meeting will be published, dependent on the tone; dovish or hawkish, and what percentage of the ECB committee are unified behind the current monetary policy, investors could move the value of the euro accordingly.
As the New York afternoon session prepares to open, the latest data on weekly and continuous jobless claims for the USA will be published, this comes after the latest Challenger job cuts information is broadcast earlier in the day. This overall jobs data, coming the day after the up to date ADP payroll data was published, prepares FX analysts and traders for the release of the NFP data, due to be published on Friday afternoon.
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