In spite of a dovish FOMC minutes yesterday that raised the possibility of further easing measures, risk appetite has been weighed by poor data out of both the US and China. The central bank committee rehashed its preference for keeping rates near zero for a prolonged period – and at least until mid-2013; but spent some time discussing whether in future they might use language specifying a period of time during which the funds rate was expected to stay exceptionally low instead of naming a calendar date. Furthermore, the minutes revealed that “a few members indicated that they believed the economic outlook might warrant additional policy accommodation”, a possibility that could have boosted risk appetite had the US GDP data earlier in the day not been quite so underwhelming. The second estimate of Q3 GDP was adjusted down a whopping half a percent to 2.0% QoQ annualized (from 2.5% in the advanced reading), mainly due to large downward revisions to the inventories component.
Overnight, the data from the worlds other economic powerhouse, China, was also disappointing; as the HSBC manufacturing PMI for November came out at 48.0, down from last month’s 51.0 print. In turn, Asian equity indices are having another depressed day, with the Hang Seng -1.9% and Shanghai Composite -0.7% at the time of writing. Due to a public holiday in Japan, the Nikkei was closed today; and given the advent of Thanksgiving this week, there is likely to be lower liquidity for FX participants during the US sessions.
Coming up in today’s session we will get the highly anticipated minutes from the last BoE meeting, where focus will no doubt be turned to whether any more momentum is building to extend the asset purchase program further. The level of UK CPI (above 5% for the last 2 readings) suggests an increase to the asset purchase target is out of the question, and yet the MPC members have doggedly stuck to their dovish outlook. Also on the data calendar today look out for a glut of German and European PMI surveys, plus US durable goods orders.
By
M.Zohaib Gadit
Forex Trading Consultant
Overnight, the data from the worlds other economic powerhouse, China, was also disappointing; as the HSBC manufacturing PMI for November came out at 48.0, down from last month’s 51.0 print. In turn, Asian equity indices are having another depressed day, with the Hang Seng -1.9% and Shanghai Composite -0.7% at the time of writing. Due to a public holiday in Japan, the Nikkei was closed today; and given the advent of Thanksgiving this week, there is likely to be lower liquidity for FX participants during the US sessions.
Coming up in today’s session we will get the highly anticipated minutes from the last BoE meeting, where focus will no doubt be turned to whether any more momentum is building to extend the asset purchase program further. The level of UK CPI (above 5% for the last 2 readings) suggests an increase to the asset purchase target is out of the question, and yet the MPC members have doggedly stuck to their dovish outlook. Also on the data calendar today look out for a glut of German and European PMI surveys, plus US durable goods orders.
By
M.Zohaib Gadit
Forex Trading Consultant
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