Equity and currency markets trade in narrow ranges due to inconclusive calendar data

Feb 4 • Market Commentaries • 2007 Views • Comments Off on Equity and currency markets trade in narrow ranges due to inconclusive calendar data

WTI oil ended the trading day close to a yearly high on Wednesday, due to US reserves falling sharply (by close on 1 million barrels) during the week according to the latest data from US authorities.

At 21:40 UK time, the commodity traded at $55.82 a barrel up 1.97%. Precious metals experienced a mixed day’s trading, silver traded up 1% after falling by close on 6% on Tuesday, while gold slipped further, by –0.18%.

US stocks ended the day mixed despite bullish fundamental economic calendar news. The ISM services PMI came in at 58.7, beating the forecast of 56.8, signalling the most robust growth in the sector since February 2019.

The ADP private jobs data report recorded 174K jobs added in January 2021, beating the forecast of 49K by some distance, suggesting that the NFP jobs data to be published this coming Friday, February 5 will be encouraging. The SPX 500 ended the session up 0.32% with the tech-heavy NASDAQ 100 index down -0.28%.

US dollar rises versus main peers but falls versus AUD and NZD

The dollar index DXY closed the day out close to flat at 91.115 as the US dollar experienced mixed fortunes versus its main peers during Wednesday’s sessions.

EUR/USD traded close to flat at 1.203, GBP/USD traded down -0.15% at 1.364. USD/CHF traded up 0.14% while USD/JPY traded close to flat. Versus both antipodean currencies NZD and AUD, the US dollar traded down.

UK services PMI comes in below 40 signalling a deep recession began in Q4 2020

After better than anticipated IHS services PMIs France’s CAC 40 ended the day down flat while the DAX 30 closed the day out up 0.71%. The UK services PMI slumped significantly to 39.5 while the composite PMI was 41.2. Both metrics were considerably below 50, the number that separates expansion from contraction.

The readings suggest that the UK GDP due to be published on February 12 will fall substantially from December’s improved readings. The FTSE 100 fell after the PMI figures, ending the day down -0.14%.

Economic calendar events to carefully monitor on Thursday, February 4

The Euro Area’s retail figures will get published during the morning; the anticipation is that both the year-on-year and month-on-month statistics will show a significant improvement. The ECB will also publish its latest Economic Bulletin, potentially impacting the euro’s value.

There are two construction PMIs released on Thursday, one for Germany and one for the UK. Both should record moderate falls for January. The UK PMI could impact the price of GBP due to the country’s heavy reliance on the construction sector for economic growth.

The UK Bank of England announces its latest interest rate decision at noon UK time, and the expectation is for the base rate to remain unchanged at 0.1%. Analysts and traders will instead turn their attention to the BoE monetary policy report, which depending on its content could impact the value of GBP.

If the report’s narrative is bearish for the UK economy and the BoE remain dovish; suggesting more QE will be forthcoming, GBP could fall against its currency peers. The weekly jobless claims figures get released in the USA in the afternoon, and analysts predict an extra 850K weekly claims with the four-week rolling average at 865K. Factory orders data for the United States will get released during the New York session, and the expectation is for a fall in December to 0.7% from the 1.0% previously recorded.

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