Forex Market Review (European Session) – Dollar at 113-yen after jobless claims before easing; strong Eurozone and UK PMI data

Forex Market Review (European Session) – Dollar at 113-yen after jobless claims before easing; strong Eurozone and UK PMI data

Plenty of data hit the markets today, including weekly jobless claims out of the US and April services PMI data for the UK and Eurozone, which also saw the release of final composite PMI figures for the same month. The dollar, as gauged by the dollar index, was down two-tenths of a percent in late European session trading with dollar / yen close to the day’s open of 112.73.

Out of the US, last week’s jobless claims fell by 19,000 relative to the week before to reach 238,000. The number was better than the 247,000 projected by analysts while claims have been below 300,000 -a mark linked with a healthy job market- for 113 weeks in a row, the longest since 1970. Continued claims, capturing those that remain on state aid after an initial week of benefits, fell to their lowest in seventeen years. Trade figures for the month of March were released by the Commerce Department at the same time as the preceding data. They showed the trade deficit declining by 0.1% to reach a better than expected $43.7 billion. Both exports and imports fell. The greenback rose to as high as 113.02 yen as the data hit the markets from 112.81 before.

Later in the day, March factory orders were released for the US as well. Those expanded by 0.2% month-on-month, posting their fourth consecutive month of growth but coming in worse than the 0.4% expected and February’s upwardly revised 1.2% (from 1.0% before). The dollar was little moved by the data relative to majors including the yen, euro and sterling.

In Eurozone data, the final composite PMI number for the month of April was released today. The number, which combines the manufacturing and services sectors, came in at 56.8, ahead of the expected and March’s 56.7. This figure constitutes a six-year year and points to a broadly-based recovery in economic activity for Eurozone countries. The final services PMI was also released today. That too came at a six-year high, beating analysts’ projections as well. Today’s figures bode well with yesterday’s first quarter GDP estimates as well as the manufacturing PMI number earlier in the week and hint to a promising second quarter for the Eurozone economies. The euro didn’t notably move versus the dollar upon release of the data but was last up on the day at $1.0938. It opened below the 1.09 handle.

In other releases pertaining to the Eurozone, retail sales for March grew stronger than expected on both an annual and monthly basis. In particular, sales grew 2.3% year-on-year, better than the 2.1% expected and favorably comparing to the previous month’s downwardly revised 1.7% (from 1.8% before). Monthly growth in sales stood at 0.3%, above the anticipated 0.1% but below February’s 0.5%, which was the result of a downward revision from 0.7%. This is the third straight month of expanding sales.

The UK saw the release of the services PMI number for April. The number came in at the four-month high of 55.8, beating expectations for a reading of 54.5 and exceeding the 55.0 from the previous month. The PMI for the services sector, the prime contributor to UK economic activity, comes after the positive respective numbers for the manufacturing and construction sectors earlier in the week. Despite the positive number, sterling didn’t post any significant gains after the release of the data as Brexit developments continue to overshadow data releases. Against the dollar, the pound was up for the day at 1.2918 after opening below the 1.29 mark and posting a one-week low of 1.2804 dollars earlier in the day. Relative to the euro, sterling was down with euro / pound hitting a one-week high of 0.8486 during European trading hours.

Looking at gold, the precious metal was last down on the day while it renewed yesterday’s low to hit a fresh one-and-a-half-month low of $1225.59 an ounce during European session trading hours. Demand for the safe-haven perceived asset is not that strong ahead of growing expectations for a Macron victory on Sunday’s second round of French presidential elections and rising odds for a June rate hike by the Fed.

European Central Bank President Mario Draghi will be speaking at 16:30 GMT at an award ceremony in Lausanne, Switzerland.

Source: Trade Forex with XM.

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