As the North American session begins, the US futures for the US stock indices are trading higher after a mixed result last week. US yields are starting lower by about 2 to 3 basis points after 10 year yields moved up by 25 basis points last week. The USD is mixed to start the new week with the greenback higher by 0.27% vs the JPY, but down -0.22% vs the GBP. The DXY is trading above and below 0.0% on the day.
In the European market, the Flash PMI manufacturing and services PMI came in mixed with Manufacturing indices missing expectations but Services indices beating expectations.
- French Flash Manufacturing PMI (EUR): Actual: 41.9 | Forecast: 43.2 | Previous: 43.1 | MISSED
- French Flash Services PMI (EUR): Actual: 48.2 | Forecast: 46.9 | Previous: 46.9 | BEAT
- German Flash Manufacturing PMI (EUR): Actual: 42.5 | Forecast: 43.1 | Previous: 43.0 | MISSED
- German Flash Services PMI (EUR): Actual: 51.0 | Forecast: 49.5 | Previous: 49.3 | BEAT
- Flash Manufacturing PMI (GBP): Actual: 47.3 | Forecast: 48.4 | Previous: 48.0 | MISSED
- Flash Services PMI (GBP): Actual: 51.4 | Forecast: 50.9 | Previous: 50.8 | BEAT
On the economic calendar US flash PMI will be releases along with Canada Housing starts and NY manufacturing data for the month of December.
- House Starts, Annualized (Canada, Nov): Estimate: 245.1k | Prior: 240.8k
- NY Fed Manufacturing (US, Dec): Estimate: 10.0 | Prior: 31.2
- S&P Global Manufacturing PMI Flash (US, Dec): Estimate: 49.8 | Prior: 49.7
- S&P Global Services PMI Flash (US, Dec): Estimate: 55.7 | Prior: 56.1
- S&P Global Composite PMI Flash (US, Dec): Estimate: - | Prior: 54.9
This week, the Fed will announce their rate decision on Wednesday with the expectation for a 25 basis point cut (its third in a row). Over the weekend WSJ TImiraos said that although "investors expect a third in a row rate cut", that officials of the Fed are also ready to slow or even stop, lowering rates after that.
The ECB cut rates last week by 25 bps. Today ECBs Lagarde said "The ECB is moving through the monetary policy cycle and the darkest days are not behind us. However, she also said that more rate cuts are to come and the direction of travel is clear. The EURUSD is trading little changed with the high today stalling near topside MA resistance holding once again at the 200 hour MA (green line on the chart below).
The Bank of England will meet this week with no change expected on Thursday. The GBPUSD is higher today (GBP higher/USD lower).
The Bank of Japan is also meeting and no change is expected. The run to the upside is continuing today for that currency pair (USD higher and JPY lower).
Below is a video, outlining the technicals in play for the three major currency pairs - the EURUSD, GBPUSD and USDJPY.
