- US markets closed – National Day of Mourning
- Purchasing Managers Index due for release from Germany, Euro-zone and the UK
After a month of consolidation on the currency
markets, traders are expected back at their desks today (maybe with a
sore head) for the onslaught of economic data that is expected this
week. On the last trading day of 2006 Sterling was on its way for its
biggest annual rise versus the US Dollar in more than 15 years thanks
to growing expectations of further hikes in UK interest rates. Last
Friday the British Bankers' Association said mortgage approvals rose
9.1% in November and new mortgage lending hit a record high of £6.7bn
pounds. This data has reinforced the view that the UK housing market is
still relatively upbeat, signifying that the two interest rate rises
from the Bank of England last year have done little to cool the
property market. The US markets are closed today for a national day of
mourning and the key ISM manufacturing index has been delayed until
Wednesday. Today will see data releases featuring Manufacturing PMI
indices from Germany, Eurozone and UK.
As mentioned above, Sterling finished last year on a very strong note
and if UK retail sales prove to have been strong over the Christmas and
New Year period it is likely that we will see a February interest rate
hike which will continue to push Sterling higher. By the last week of
2006 Sterling peaked with gains of nearly 14% versus the US Dollar, its
biggest annual rise since 1990 when markets saw gains of nearly 20%.
The UK PMI data is due for release today and is anticipated to hold
around 52.6. With US markets out today the USD is expected to trade
within its range but we are eagerly awaiting the ISM data tomorrow and
the minutes of Decembers FOMC meeting with the unemployment rate due
for release on Friday with expectations for the figure to remain at
4.5% prevailing.
The Euro was also the flavour of the month in December with extensive
talk that the European Central Bank will carry on raising interest
rates in 2007. Data released this morning shows that the Euro-zone’s
manufacturing data saw output growth at its slowest pace in nine
months. The purchasing manager’s index for the Euro zone manufacturing
sector slipped to 56.5 in December, despite this fall, the sector
continues to grow at a solid pace as a reading above 50 means that the
sector is expanding. So placing Limit Orders at strategic levels is
certainly the key for this week for those of you with immediate
requirements.
The
Supreme Court has ruled that they cannot have a nativity scene in
Washington, D.C. This wasn't for any religious reasons. They couldn't
find three wise men and a virgin.
Jay Leno
FX Research and Analysis undertaken by:
David Johnson - Halo Financial
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