Admiral Markets
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Manufacturing PMI Data In Focus
In a week shortened by Christmas holiday, the US Dollar index (I.USDX), that measures US Dollar's performance against its major counterparts, managed to edge up on the back of better than expected third-quarter GDP print. The final revision of US GDP showed economy growing at a seasonally adjusted annual rate of 5%, posting its strongest growth since the third-quarter of 2003. Stronger growth data helped US Dollar to register gains in otherwise a directionless trading week.
Going forward, thin trading conditions are likely to prevail as investors look ahead to manufacturing PMI data from the US and other parts of the global economy, which might provide some fresh cues for the upcoming week.
The week begins with the release of Conference Board's consumer confidence index for the month of December, scheduled for release on Tuesday. Following a decline to a five month low of 88.7 in November, market participants expect the index to rise to 94.6 in December. From the US housing sector, a forward-looking indicator, pending home sales data for the month of November is scheduled for release on Wednesday. After an unexpected decline October, which was followed by a weaker-than-expected readings in the preceding two month, the data is now expected to show a rise of 0.6% in November.
This week releases pertaining to the US manufacturing sector includes Chicago PMI and ISM manufacturing PMI, scheduled for release on Wednesday and Friday, respectively. The Chicago manufacturing PMI for the month of December is expected to show a marginal decline to 60.2 from 60.8 recorded in November. Meanwhile, the ISM manufacturing PMI for the month of December is also expected to tick lower to 57.6 as compared to a reading of 58.7 for the previous month. A slight drop in manufacturing activity already seems to be priced-in, however, any major divergence, especially a reading that shows more-than-expected weakness in the manufacturing activity could possibly weaken the US Dollar slightly.
Chinese manufacturing data for the December from this week's economic calendar includes final reading of the HSBC's manufacturing PMI and official manufacturing PMI. Final reading of the HSBC manufacturing PMI is scheduled for release on Wednesday and is expected to match the flash reading of 49.5, confirming contracting manufacturing activity in December. Similarly, the official manufacturing PMI, scheduled for release on Thursday, is expected to drop further to barely hold the 50-point mark, which separates contraction and expansion. Being China's largest trading partner, Chinese manufacturing data always bears some lasting impact on the Australian Dollar (AUD). Hence, deteriorating Chinese manufacturing activity is likely to exert further pressure on the already weaker AUD.
The release of UK manufacturing PMI for the month of December, scheduled for release on Friday, is the key highlight from this week's UK economic calendar. The index is expected to continue showing expanding manufacturing activity with the reading for the month of December expected to come-in at 53.7, little changed from 53.5 recorded in the November release.
Although, important PMI readings might provide some fresh trading cues for the upcoming week, but the year-end holiday season is expected to keep the trading activity light and restrain some large moves in the Forex market, at-least till the time liquidity normalizes. However, upbeat US economic indicators would fuel speculations of an earlier rate-hike by the Fed, eventually leading to a further up-tick for the US Dollar.
“Original analysis is provided by Admiral Markets”
In a week shortened by Christmas holiday, the US Dollar index (I.USDX), that measures US Dollar's performance against its major counterparts, managed to edge up on the back of better than expected third-quarter GDP print. The final revision of US GDP showed economy growing at a seasonally adjusted annual rate of 5%, posting its strongest growth since the third-quarter of 2003. Stronger growth data helped US Dollar to register gains in otherwise a directionless trading week.
Going forward, thin trading conditions are likely to prevail as investors look ahead to manufacturing PMI data from the US and other parts of the global economy, which might provide some fresh cues for the upcoming week.
The week begins with the release of Conference Board's consumer confidence index for the month of December, scheduled for release on Tuesday. Following a decline to a five month low of 88.7 in November, market participants expect the index to rise to 94.6 in December. From the US housing sector, a forward-looking indicator, pending home sales data for the month of November is scheduled for release on Wednesday. After an unexpected decline October, which was followed by a weaker-than-expected readings in the preceding two month, the data is now expected to show a rise of 0.6% in November.
This week releases pertaining to the US manufacturing sector includes Chicago PMI and ISM manufacturing PMI, scheduled for release on Wednesday and Friday, respectively. The Chicago manufacturing PMI for the month of December is expected to show a marginal decline to 60.2 from 60.8 recorded in November. Meanwhile, the ISM manufacturing PMI for the month of December is also expected to tick lower to 57.6 as compared to a reading of 58.7 for the previous month. A slight drop in manufacturing activity already seems to be priced-in, however, any major divergence, especially a reading that shows more-than-expected weakness in the manufacturing activity could possibly weaken the US Dollar slightly.
Chinese manufacturing data for the December from this week's economic calendar includes final reading of the HSBC's manufacturing PMI and official manufacturing PMI. Final reading of the HSBC manufacturing PMI is scheduled for release on Wednesday and is expected to match the flash reading of 49.5, confirming contracting manufacturing activity in December. Similarly, the official manufacturing PMI, scheduled for release on Thursday, is expected to drop further to barely hold the 50-point mark, which separates contraction and expansion. Being China's largest trading partner, Chinese manufacturing data always bears some lasting impact on the Australian Dollar (AUD). Hence, deteriorating Chinese manufacturing activity is likely to exert further pressure on the already weaker AUD.
The release of UK manufacturing PMI for the month of December, scheduled for release on Friday, is the key highlight from this week's UK economic calendar. The index is expected to continue showing expanding manufacturing activity with the reading for the month of December expected to come-in at 53.7, little changed from 53.5 recorded in the November release.
Although, important PMI readings might provide some fresh trading cues for the upcoming week, but the year-end holiday season is expected to keep the trading activity light and restrain some large moves in the Forex market, at-least till the time liquidity normalizes. However, upbeat US economic indicators would fuel speculations of an earlier rate-hike by the Fed, eventually leading to a further up-tick for the US Dollar.
“Original analysis is provided by Admiral Markets”