New year trading started on an upbeat note this Tuesday morning as Chinese equities led gains after property shares soared on strong manufacturing data. However, major European indices dipped this morning while the dollar slid following its worst year in more than a decade. Turbulence in the EU markets was put down to geopolitical unrest. Iranian protesters attacked police stations late into the night on Monday, as security forces struggled to contain the boldest challenge to the clerical leadership since unrest in 2009.Traders will be looking forward to the US Nonfarm Payrolls report this week, which could give a boost to the underperforming US dollar.
1. U.K Manufacturing PMI (Dec) To Affect GBP
The UK will see the release of PMI data this Tuesday at 9:30 GMT, which is going to be closely monitored as flash readings are not published for the UK. The Markit/CIPS manufacturing PMI will be followed by the construction PMI on Wednesday and the services PMI on Thursday. The manufacturing and construction PMIs are seen falling slightly in December, but the services PMI is expected to hold steady at 53.8. The pound (GBP) is expected to be supported by stronger readings and a weaker greenback.
2. Canada’s Employment Change (Dec) To Affect CAD
The Canadian dollar which has surged to a 10-week high just before the end of the year after stronger-than-expected inflation and retail sales figures, may expect more support this week. Next Friday’s employment report out of Canada has the capacity to push the currency even higher as investors speculate whether the Bank of Canada could raise rates again this month. Employment is forecast to rise by 10k in December, below the stellar 79.5k figure of November but still marking a long-run increase.
3. U.S. Nonfarm Payrolls (Dec) To Affect USD
The US currency plummeted shortly before the New Year in response to the passage of Trump’s tax plan. Data due out of the United States next week may help shift sentiment to a more bullish one with the first major release being Wednesday’s ISM manufacturing PMI. The closely watched index is forecast to fall slightly from 58.2 to 58.1 in December. November trade data and factory orders are also out on Friday but the focus will be the nonfarm payrolls report. The US economy is expected to add 189k jobs in December versus 228k in the prior month. The jobless rate is forecast to remain unchanged at 4.1%, while average earnings are also likely to hold steady.
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