03 December 2013 The Big Picture • The dollar gained against most major currencies on Monday after U.S. manufacturing data beat expectations. The U.S. Institute for Supply Managements index of national factory activity rose in November at its fastest pace since April 2011, rising to 57.3 from 56.4 in October. Friday’s non-farm payrolls report are expected to provide further clues as to when the Fed will start reducing its monthly $85 billion bond purchases. Across the Atlantic, a similar indicator beat expectations as well. Markit Economics reported that the euro zones manufacturing PMI rose to a two-year high of 51.6 in November from Octobers 51.5. Germanys PMI came in at 52.7, however overall strength was undercut by a downturn in Spain and France. The yen came under pressure on speculation of further central bank easing in order to meet its 2% inflation target by 2015. That makes yen the best funding currency, in our view. The Australian dollar fell after the RBA left its benchmark interest rate unchanged at a record low 2.5% early Tuesday and reiterated that the currency is uncomfortably high. • Oil prices in Asia held onto overnight gains Tuesday morning on the PMIs, which showed industrial activity in the U.S. and China, the worlds largest consumers of crude, beat expectations. In China on Monday, the Chinese HSBC Manufacturing PMI came in at an unchanged 50.8 in November, beating market calls for a decline to 50.5. Gold prices eased slightly in Asia Tuesday on firming expectations for the Federal Reserve to begin scaling back monetary stimulus programs in early 2014. • A quiet Tuesday today. The only important indicators coming out during the European session are the UK construction PMI for November and Eurozone’s PPI for October. UK’s construction PMI is expected to decline to 59.0 from 59.4 in October, while Eurozone’s PPI is estimated to fall by 0.2%, a turnaround from +0.1% in September. Furthermore, Bank of England publishes the record of its financial policy committee meeting held on Nov. 20. Overnight, Australia publishes data on its GDP for Q3. The release is expected to show a rise of 0.7% qoq, an acceleration from +0.6% in Q2. This will bring the yoy rate down to 2.5% from 2.6%. We have only one speaker today. ECB’s Ewald Nowotny speaks at an event in Brussels.
Posted on: Tue, 03 Dec 2013 09:18:01 +0000
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