There are a number of key economic releases due to be released today including UK Service Sector PMI data, European Commission growth forecasts, US Non-Manufacturing ISM data and the New Zealand Unemployment Rate.
UK Services PMI
Lets start with the UK Service Sector, which accounts for around 70% of the entire British economy and is therefore very important for traders of the Pound. During the third quarter British Service Sector output expanded at its strongest quarterly rate for over 16 years, which contributed to a robust GDP print of 0.8% and helped persuade the Bank of England to refrain from further asset purchases.
If this morning’s Services print remains close to the 60.0 mark that analysts expect it to, Sterling is likely to receive a slight boost as this would indicate that economic output is still accelerating in the fourth quarter.
European Commission growth forecasts
Across the channel in the 17-nation bloc the European Commission is set to release its latest growth forecasts, which are likely to show that the region is building up a little bit of momentum following the deep recession that reduced output for six consecutive quarters between late-2011 and the first half of this year.
With sentiment towards the Euro fairly weak, due to last week’s soft Eurozone inflation print of 0.7%, it is unlikely that the single currency will respond especially well to the forecasts unless they feature a significant upgrade to next year’s Eurozone GDP projections. Currently the EC expects minimal growth of just 0.1% in 2014.
US ISM Non-Manufacturing
Across the Atlantic in the United States, key ISM Non-Manufacturing data is predicted to print at 54.0 for October, slightly below September’s 54.4. The survey, which incorporates the performance of over 400 Service Sector businesses across America, could lend the US Dollar some support if it prints stronger than analysts expect. Last Friday the ISM Manufacturing report came in at 56.4 compared to forecasts of 55.0 suggesting that investor confidence was not damaged by the government shutdown as much as first thought; this also bodes well for this afternoon’s Non-Manufacturing report.
The US Dollar performed fairly well yesterday as traders reacted to positive comments from Federal Reserve Bank of Dallas President Richard Fisher suggesting that QE3 should be wound down as soon as possible.
New Zealand Unemployment Rate
Down under in New Zealand this evening’s labour market report is expected to show that Unemployment declined from 6.4% to 6.1% during the third quarter, marking a 1.6% annual improvement in the labour market.
If the report comes in as expected then it is likely to bolster demand for the New Zealand Dollar as traders mull over the possibility of higher yields on investments in the Antipodean country. The Reserve Bank of New Zealand has communicated that it intends to raise rates in 2014, and this is working to prop-up the ‘Kiwi’ Dollar. It is thought that the RBNZ will begin its hiking cycle at some point next year, and that the benchmark interest rate will reach a peak of around 4.50% late-2015.
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