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Eurozone, UK PMIs expected to rise, strong US employment report may bolster USD

business-articlesEurozone, UK PMIs expected to rise, strong US employment report may bolster USD
  • Eurozone PMI expect to confirm strong growth in December
  • Possible uptick in services PMI likely to strengthen Sterling
  • USD may rise following robust employment report
Eurozone PMI expected to show that growth boomed at end of 2017

The Eurozone will publish its latest composite PMI figures this morning, with the final reading for December expected to confirm that the bloc ended 2017 on a high note.

Economists forecast that the index will have risen from 57.5 to 58.0 last month, confirming that the private sector in the Eurozone expanded at its fastest pace since 2011. 

This will cap off a strong year of growth in the bloc, with the Eurozone appearing to have finally emerged from the debt crisis.

Markets are also likely to hope that the stellar growth in the Eurozone last year will prompt a more hawkish outlook from the European Central Bank (ECB) in 2018, although persistently low inflation is still likely to prevent the bank from altering current monetary policy.

Uptick in GBP reliant on robust UK services PMI

The UK will release the last of December’s PMI data later this morning, with GBP investors hopeful that it will help to push the pound higher.

Analysts currently predict that the latest services PMI will have climb from 53.8 to 54.1 in December, thanks to the increased activity during the Christmas period.

However, given that both the construction and manufacturing PMIs underperformed last month there are concerns that the service sector could suffer a similar fate.

This is something which could led to a downturn in the pound, given that the service sector accounts for over 70% of the UK’s total economic growth.

USD may gain if ADP employment remains robust  

The US dollar may be able to extend its recent rally later this afternoon as the US publishes its latest private sector employment data.

Payroll processor ADP is forecast to report that the private sector welcomed 192,000 people to the US workforce in November, slightly up from the 190,000 added in November.

While this is lower than some of the highs struck earlier in the year, it remains well above the long-term average of 68,700.

A strong report will also bolster optimism that the latest US Non-farm payrolls figures will beat expectations when they are released at the end of the week.

Upcoming Data

Thursday, 4 January, 2018
09:00               EUR Composite PMI
09:30               GBP Services PMI
12:15               USD ADP Employment Change
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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