Jan 24 – EUR & GBP Under The Spotlight, While The USD Gets Pounded
Arslan Butt • 3 min read
Good morning, fellas. I wasn’t there yesterday because of my Ph.D. exams but now I’m back with a review of important economic events today. Seems like it’s all about the EUR and GBP today as the economic calendar is full of medium to high impact economic events from the Eurozone and the UK. Check these out…
Today’s Economic Events
Eurozone – EUR
We have a number of PMI figures due from the Eurozone but before we explore these in details, let’s see what is PMI figure and how it can impact the market.
PMI stands for Purchasing Managers’ Index and it’s a leading indicator of economic health. The businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.
These figures are compared to the benchmark rate of 50. Above 50 indicates industry expansion, below indicates contraction. The major global economies are releasing this figure well above 50 so it’s becoming hard for investors to realize it impacts on the currency.
Fellas, I usually compare the current value of PMI with its forecast and the previous figures. Thus, if the release is significantly higher or below the forecast and past figure, it becomes really easy for us to determine the direction of movement.
Now let’s take a look at the today’s scheduled PMI figures…
French Flash Manufacturing PMI – The figure is due at 8:00 (GMT) with a forecast of 58.7 vs. 58.8 during the previous month. Not much volatility can be expected on this.
French Flash Services PMI – Alongside the French Manufacturing PMI, the services PMI will be monitored. It’s forecast to be 58.9 vs. 59.1.
German Flash Services PMI – Right after 30 mins of French Services and Manufacturing PMI’s, the services PMI will be monitored at 8:30 (GMT). It’s forecasted to be 55.6 vs. 55.8.
German Flash Manufacturing PMI – is scheduled with a forecast of 63.2, well above the benchmark of 50.
Flash Manufacturing PMI – The figure is coming out at 9:00 (GMT). Last time on Dec 14, the figure crossed above the milestone of 60.
Buddies, we have ECB rate decision tomorrow, and this stream of economic events are likely to give us further clues about their monetary policy. The positive events will sure weight on the ECB for hawkish tone, ultimately supporting the already supported Euro.
Great Britain Pound – GBP
Average Earnings Index 3m/y – The figure shows a change in the price businesses and the government pay for labor, including bonuses. The figure isn’t expected to show any surprises today. Anyways, it’s scheduled at 9:30 (GMT)
Labor Market Figures – So far, the UK labor market has improved a lot, forcing BOE (Bank of England) to hike the interest rates.
Claimant Count Change – At 9:30 (GMT) today the Office for National Statistics will release data on jobless claims. According to the economists, only 2.3K people have filled the claims in the last month which is well below 5.9K claims in Dec 2017.
Unemployment Rate – Besides jobless claims, the unemployment rate is expected to remain unchanged at 4.3%.
The Sterling is likely to trade with a bullish sentiment as the traders will price in the positive labor market figures before the actual release.
U.S. Dollar – USD
Crude Oil Inventories – Here’s something for the Crude Oil lovers. EIA will release the inventory at 15:30 (GMT). The inventories are expected to show a draw of -1M barrels. For your information, EIA reported a draw of -6.9M in the last week. Comparatively, – a 1M draw is way less than the previous figure and Crude may not get bullish over this.
Last but not the least, the Existing Home Sales will be monitored at 15:00 (GMT). Current month’s figure is expected to drop to 5.72M from 5.81M in Dec.
That’s it for now, stay tuned for more updates as some really exciting trade ideas are on the way. Good luck.