Sterling maintains position in tight ranges, euro slides as Germany factory orders crash, yen slips as risk on mood continues
Wednesday’s latest instalment of Brexit drama ended with MPs in the House of Commons voting through a Bill, which will force the U.K. prime minister to approach the European Union, to ask for a longer extension. However, the E.U. is under no obligation to honour such a request, therefore, many political analysts were left confused as to what the Bill has actually achieved. Other than to reinforce the concept that Parliament is now in control of decision making and not the government executive, or the prime minister.
Sterling steadied in late evening and during the Sydney-Asian trading session and by 7:30am U.K. time on Thursday, GBP/USD traded in a tight range, just above the daily pivot point (P.P.), up 0.17% at 1.318. EUR/GBP traded in an extremely tight range, down -0.10% at 0.853, right on the daily P.P. Versus several of its other peers, sterling made modest gains, as FX analysts and traders wait to react to the next chapter in the Brexit saga. There are no significant calendar events relating to the U.K. economy, scheduled for release during Thursday’s London-European session.
Germany published extremely disappointing factory orders statistics early Thursday morning, before the London-European session opened. Reuters had forecast that the latest month on month figure would come in at 0.30% for March, improving the year on year fall to -3.10%, instead, the month on month figure came in at -4.2%, compounding the yearly fall to a stunning -8.4%. The readings represent the worst figures posted in approximately two years, whilst factory orders are now in their longest series of decline since 2009, after posting four months of contraction, heightening concerns that the Germany economy could be entering a recession.
As the engine of manufacturing growth in Europe and one of the top four manufacturers globally, such a result could cause analysts to take a sharp intake of breath, as they struggle to recalibrate the prospects for German growth in 2019. Undoubtedly, the performance has been impacted by the slump in orders from China, caused as a consequence of the China-USA trade war, resulting in a knock on effect for factory orders. As to whether (or not) this is a temporary issue, that’ll recover once various tariffs and barriers to trade are lifted, will become clearer during the coming months.
The minutes relating to the recent ECB meeting will be published at 12:30pm U.K. time, analysts will look for evidence that the ECB are unanimous in their commitment to the current policy of the ECB and for any clues of any significant change, in the form of forward guidance, to the current monetary policy. At 8:00am U.K. time as the trading session opened, EUR/USD traded at 1.124, up 0.06%, trading tight to the daily pivot point. Germany’s DAX index fell by circa -0.2% as European markets opened.
In a relatively quiet day for USA related economic calendar news on Thursday, focus will turn to jobs related data, coming on the eve of the latest NFP jobs data, due for publication on Friday afternoon at 13:30pm U.K. time. The latest Challenger jobs cuts metrics will be published, this figure reveals the volume of large scale redundancies being made by USA based corporations, delivering an insight into the overall confidence large firms have, to maintain employment levels.
The latest USA unemployment claims data will also be revealed at 13:30pm U.K. time, both the weekly claims number and continuous claims. After the ADP jobs number came in below forecast on Wednesday, and on the eve of the NFP number, Thursday’s data could offer up clues as to the jobs number printed on Friday. The Reuters NFP prediction is for the creation of 175k jobs in March, a significant recovery from the shock 20k, reported for February.
At 8:40am U.K. time, the futures markets for USA indices were indicating a negative open once the New York session commences trading; the SPX future price was down -0.12% and NASDAQ was down -0.16%. The U.S. dollar traded marginally down versus the majority of its peers during Thursday’s early trading sessions; at 9:00am USD/JPY traded down 0.09%, trading close to the 200 DMA sited at 111.5, whilst USD/CHF traded flat at 0.998, having traded in a wide range, as the major pair has remained close to parity, during the majority of 2019.
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