USD extend gains

Daily Update

Yesterdays Market

• EUR Consumer Price Index, Harmonized Index of Consumer Prices & Unemployment Rate
• GBP Markit Manufacturing PMI
• USD ISM Prices Paid & ISM Manufacturing PMI

Yesterday’s Focus

Better than expected data from the USA helped US Dollar extend its gains made over its major rivals. The ISM Manufacturing PMI jumped by 1.5 points to 54.7, better than the 53.2 predicted. The ISM prices paid component jumped to 65.5 which was better than the 55.5 prediction. Also, the employment component is looking good with 53.1 instead of 52.5 expected. This is a positive sign for Friday’s Non-Farm Payrolls report.

Positive reports from Euro Zone did not help EUR to gain any positive boost. Data coming from the UK showed that the manufacturing sector grew to a two-and-a-half-year high in December, as the Markit Manufacturing PMI came in at 56.1 from an upwardly revised 53.6 in November.

In a separate publication, US construction spending also beat projections, rising by 0.9% instead of 0.6% estimated and on top of an upwards revision worth 0.1%.The US dollar started 2017 with a resumption of the rises, after taking a break during the holidays. EUR/USD dropped back under 1.04, GBP/USD struggled to rise in spite of good data and USD/JPY tops 118 once again. Also among commodity currencies, we are seeing the CAD failing to advance even though oil prices are at 18 month highs and the Aussie only briefly enjoyed the Chinese data.

Today’s Market

• EUR Markit Services PMI, Markit PMI Composite & Consumer Price Index
• GBP PMI Construction, Consumer Credit & Mortgage Approvals
• USD ADP Employment Change & FOMC Minutes

Today’s Focus

The day will start with economic reports from Europe on Markit Services PMI and Markit PMI Composite which are indicators of the economic situation in the Euro Zone services sector. This will be followed by PMI construction from UK , which shows business conditions in the UK construction sector. Next will be Consumer Credit report which shows the amount of money that’s borrowed by UK residents. It shows if consumers can afford large expenses, which can fuel economic growth.

This will be followed by Mortgage approvals report from UK, which is an leading indicator of the UK Housing Market. A Mortgage growth represents a healthy housing market that stimulates the overall UK economy. By evening USA will release ADP Employment change report, which is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth.  The day will end with FOMC minutes of the December meeting.