PMI DATA HEADLINES ECONOMIC CALENDAR AFTER NEW YEAR
The first trading session of the new year is expected to see limited activity, with only a handful of PMI data scheduled to make headlines.
Action begins at 08:15 GMT with a report on Spain’s manufacturing PMI. For the next hour and a half, IHS Markit will release PMI reports for France, Italy, Germany, Greece, the United Kingdom and broader Eurozone.
In North America, Markit will also report on US and Canadian manufacturing conditions.
Earlier in the day, Caixin China said manufacturing conditions in the world’s second largest economy improved unexpectedly last month. The December manufacturing PMI rose to 51.7 from 50.8 in November. Analysts in a median estimate called for a reading of 50.6.
“For the most part, the manufacturing sector remained stable in November, although some signs of weakness emerged,” Dr. Zhengsheng Zong said in the official PMI press release. “In the fourth quarter, the economy is likely to maintain the stability observed since the start of the second half of the year. Economic growth in 2017 is expected to be higher than last year, but it may come under downward pressure in 2018.”
2017 was a banner year for global equities, with Asian, European and US stock indexes gaining between 7% and 36%. Much of the gains were led by Wall Street, which rallied behind President Trump’s young presidency. The Trump administration is expected to adopt a cocktail of policy measures aimed at boosting economic growth. Optimism in the plan contributed to back-to-back quarters of solid GDP growth for the world’s largest economy.
However, political optimism failed to lift the US dollar. The world’s most actively traded currency is coming off its worst annual performance in well over a decade even as the Federal Reserve raised interest rates multiple times.
The Fed will hold its first meeting of the year on 30 January, which will be the final meeting with Janet Yellen at the helm. She will be replaced in February by current Fed Governor Jerome Powell.
The euro was little changed on Tuesday after a solid week of gains in the final stretch of 2017. The EUR/USD is trading above 1.2000, and could be poised to re-test multi-year highs near 1.2100. The pair added 15% during 2017.
The Cable also ended the year on solid footing, closing above 1.3500 for the first time in three weeks. The GBP/USD faces immediate support at 1.3490, followed by 1.3460. Key resistance levels include 1.3550 and 1.3595.
The Canadian dollar was down slightly in Asian trading, but continued to hover near 10-week highs. The USD/CAD exchange rate is currently trading around 1.2535, with the bears eyeing a reversal back down toward 1.2500.