Waiting On The Grey Haired Silver Foxes - The service sector for both the euro zone and the UK came in stronger than expected for the month of January. Euro zone PMI rose to 55.9 from December's reading of 54.2 while the UK PMI jumped to 54.5 form 49.7 and well above the 51.3 that was expected. Therefore, the strong reading in the service sector today coupled with the strength of the manufacturing PMI earlier in the week, reinforce the notion that the euro zone and the UK recovery are broadening. Today's data caused profit taking in the Euro because market players wanted to hear the press conference of silver fox #1, ECB President Jean-Claude Trichet after the ECB policy meeting today. The market want to see if he diverges from his recent warnings on the need to tackle inflationary pressures. Meanwhile, today's data for the UK caused the GBP to surge higher against the USD as the data boosted speculation that the Bank of England has room to raise interest rates this year. The GBP did not sell off like the Euro did because silver fox #2, Bank of England Governor Mervyn King, doesn't need to speak until next week's policy meeting. As for silver fox #3, U.S. Federal Reserve Chairman Ben Bernanke, is due to speak at 12:30 EST, where he will reaffirm the Fed's focus on boosting growth and employment. In Asia, the AUD was up against the USD after strong Australian trade data and domestic building permits adding to signs that the economy remains resilience despite vast flooding and cyclones. Remember trading activity is quieter than usual amid Asian markets which remained closed for the Lunar New Year holiday. In Canada, the CAD was little changed against the USD after hitting a its strongest level in two weeks. The market is awaiting tomorrow's employment report for both the U.S. and Canada. Keep in mind that anything that indicates that U.S. growth is stronger than expected has been a positive for the Canadian growth outlook and the CAD.
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