The forex markets start rather slowly today as, without any news, traders are staying in holiday mood. Trading could remain subdued today as UK manufacturing PMI is seen as the only market moving event. Nonetheless, US events will take lead later in the week with FOMC minutes, ISM indices and non-farm payrolls featured. Dollar was under tremendous pressure by the end of last year, partly thanks to surging commodity prices. The greenback will need some strong data to give it a life. Otherwise, Dollar index would have a take on 91 key support level within January.
North Korea Kim offer talks with South
North Korea catches much attention in a slow start to 2018. It’s leader Kim Jong-Un warned in the new year speech that the country will be "mass producing nuclear missiles for operational deployment" this year. And Kim said there is a "nuclear button" on his desk and warned the US "never start a war" against him or his nation. But Kim also spent a lot of time on improving North-South relationship. He said that "it’s about time that the North and the South sit down and seriously discuss how to improve inter-Korean relations by ourselves and dramatically open up." Kim even urged to the officials to "urgently meet" on sending a North Korea delegation to the Winter Olympics.
Kim’s comments were taken by some as a test on US-South Korea alliance. But for now, nothing has changed yet. South Korean President Moon Jae-In responded today and said "the improvement of relations between North and South Korea cannot go separately with resolving North Korea’s nuclear program, so the foreign ministry should coordinate closely with allies and the international community regarding this,"
China Caixin PMI manufacturing improved
China Caixin PMI manufacturing rose to 51.5 in December, up from 50.8 and beat expectation of 50.7. That’s the highest level in four months. Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said in the release that "manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected,." However, he also warned of the "downward pressure on growth due to tightening monetary policy and strengthening oversight on local government financing."
For the rest of the day
PMI data will be the major focus. In particular, UK PMI manufacturing is expected to drop to 57.9 in December, down from 58.2. Eurozone will release PMI manufacturing final. Canada and US will also release PMIs.
For the week ahead
US events will be the major focuses in a holiday shortened week. ISM indices and non-farm payrolls will be mostly watched. FOMC minutes will also be scrutinized for how worried are Fed officials on slow inflation. In addition, UK PMI would likely trigger some volatility in Sterling. Canadian Dollar trade will also look into job data to be featured on Friday.
- Wednesday: Swiss manufacturing PMI; German unemployment; UK construction PMI; US construction spending, ISM manufacturing; FOMC minutes
- Thursday: Eurozone PMI services final; UK PMI services, M4, mortgage approvals; US Challenger job cuts, ADP employment, jobless claims; Canada IPPI and RMPI
- Friday: Japan monetary base; Australia trade balance; German retail sales; Eurozone CPI flash, PPI, retail PMI; Swiss foreign currency reserves; Canada employment, trade balance, Ivey PMI; US non-farm payroll, ISM manufacturing, trade balance, factory orders
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 1:45 | CNY | Caixin PMI Manufacturing Dec | 51.5 | 50.7 | 50.8 | |
| 8:45 | EUR | Italy Manufacturing PMI Dec | 58.5 | 58.3 | ||
| 8:50 | EUR | France Manufacturing PMI Dec F | 59.3 | 59.3 | ||
| 8:55 | EUR | Germany Manufacturing PMI Dec F | 63.3 | 63.3 | ||
| 9:00 | EUR | Eurozone Manufacturing PMI Dec F | 60.6 | 60.6 | ||
| 9:30 | GBP | PMI Manufacturing Dec | 57.9 | 58.2 | ||
| 14:30 | CAD | RBC Manufacturing PMI Dec | 54.4 | |||
| 14:45 | USD | US Manufacturing PMI Dec F | 55 | 55 |
