With USA equity markets closed on Thursday due to thanksgiving holiday, the volume of trading in the FX markets was also effected, with the dollar falling versus the euro and the rest of its main peers. However, price action was extremely limited throughout the day, with the major currency pairs experiencing very little in terms of movement. EUR/USD ended the day up circa 0.3%, resting close to the first line of resistance. As a consequence of the U.S. holiday there was little in the way of economic news emanating from The States, whilst political tensions in the country also took a back seat.
Thursday was an extremely busy day for European economic calendar news, with most of the medium to high impact news coming in ahead of forecasts. German GDP continued its impressive performance in 2017, the YoY Q3 figure came in at 2.8%, putting that figure in context it’s close to being twice the annual growth that the U.K. is currently delivering. German exports rose by a significant level, rising by 1.7% MoM, beating the forecast of a 1.1% rise, and with imports also critically coming in less in value than exports, the hard data economic figures continue to suggest that the German economy is operating as a classic model of economic orthodoxy and efficiency.
France, Germany and the wider Eurozone also posted impressive Markit PMI readings, the most impressive were the manufacturing PMIs all beating forecasts, which given that PMIs are leading as opposed to lagging indicators, suggests that business managers throughout the Eurozone’s three leading countries, are extremely confident with regards to the future prosperity of the region.
Several Eurozone equity markets closed up sharply as a result of the optimistic data, with the DAX closing down slightly, as Angela Merkel began to consider entering into coalition with her party’s former Social Democratic Party partner. The euro closed the day out up versus the majority of its peers, rising by close to 0.6% versus the U.K. pound.
Thursday saw a raft of data published regarding the U.K. economy, GDP came in YoY at 1.5% unchanged from the previous quarter, suggesting that the U.K. will post a similar figure for the 2017 year to date growth, significantly below the predictions made by the government treasury and OBR at the start of the year. Despite the pound falling in value versus its main business partners’ peer currencies (USD and EUR), since the referendum decision taken in June 2016, the expected rise in exports hasn’t materialised in Q3, whilst the U.K. is continuing to suck in more expensive imports due to a falling pound since June 2016, which rose by 1.1% in the same quarter.
This toxic recipe is likely to increase inflation, particularly if sterling suffers further falls versus EUR and USD as Brexit approaches. Total U.K. business investment also fell, suggesting that business operators will struggle to improve the U.K.’s current production malaise. With the exception of modest rises versus the U.S. and Canadian dollars, sterling fell versus its peers during Thursday’s trading sessions.
U.S. DOLLAR
USD/JPY traded in an extremely tight range, the major pair ended the day down circa 0.1% at 111.2 and has now breached two critical combined moving averages to the downside; the 100 DMA and 200 DMA, both sited at 111.6. USD/CHF has breached the 200 DMA to the downside, closing down 0.2% at 0.981. USD/CAD whipsawed through a tight bearish range during Thursday, falling through S1 and down approximately 0.3%, to then make a modest recovery, ending the day down circa 0.1% at 1.272.
EURO
EUR/USD appears to have found momentum and impetus to stay above the 100 DMA, closing the day up circa 0.3% at 1.184, resting on the first line of resistance. EUR/GBP ended the day up approximately 0.5% rising at one stage through R2, to then fall back. EUR/CAD followed a similar pattern, EUR/JPY closed out the day up circa 0.3%, at 131.8.
STERLING
GBP/USD ended the day at 1.330, up circa 0.1% on the day, GBP/CHF traded in a narrow bearish range, falling through S1 at one stage, to then recover. GBP/CAD whipsawed through a mainly bearish range, falling through S1, to then recover, pushing back up through the daily pivot point to end the day up circa 0.1%, at 1.691.
EQUITY MARKETS SNAPSHOT FOR NOVEMBER 23rd.
• DAX closed down 0.05%.
• FTSE 100 closed down 0.02%.
• CAC closed up 0.50%.
• Euro STOXX closed up 0.26%.
KEY ECONOMIC CALENDAR EVENTS FOR NOVEMBER 24th.
• EUR German IFO Business Climate (NOV).
• GBP BBA Loans for House Purchase (OCT).
• USD Markit US Manufacturing PMI (NOV P).
• USD Markit US Services PMI (NOV P).
• USD Markit US Composite PMI (NOV P).
