Sterling edges higher, Euro slips on weak manufacturing data
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Sterling firmed against its major peers on the first trading day since the Easter break on Tuesday as a better-than-expected manufacturing PMI drew attention away from the uncertainty surrounding the Brexit negotiations.
Economic news out of the Eurozone appears to be heading in the wrong direction. Yesterday’s Eurozone manufacturing PMI confirmed that the index had slowed to its lowest level since July 2017, albeit still remains at a healthy 55.6. This, combined with a broadly impressive performance in the US Dollar, caused the Euro to slip to its lowest level in over two weeks, back below the 1.23 mark.
Next up for the common currency is this morning’s unemployment and inflation numbers. Consensus is for a rather sharp uptick to 1.4% in the headline number from last month’s 1.1%.
US Dollar rallies on recovery in global risk appetite
A return in risk appetite helped the US Dollar recover against the safe-haven Japanese Yen and Swiss Franc. The Dollar sank below the 106 mark versus the Yen on Monday as equity markets suffered from a broad sell-off. A rebound in stocks yesterday reversed its losses and allowed the currency to recapture the 106 level. The greenback also received decent support from higher US yields, with the 10 year rising above 2.75%.
All attention in the US this week will be on Friday’s nonfarm payrolls report, which could give us an indication as to whether the Federal Reserve could be on course to raise interest rates on four occasions in the US this year. In the meantime, tomorrow’s ADP employment report, which measures labour market strength in the private sector of the economy, is expected to print above 200,000 again. This would bode well for Friday’s more significant nonfarm payrolls report.