Sterling up and Trump leaves in a huff
Sterling immediately pushed through the 1.3000 mark on the Dollar triggering notable stop-loss buying, short covering and Trump cutting his trip to the UK short. The service sector PMI for November edged up from the preliminary estimates to 49, above consensus but still the weakest figures since March. New business declined at the fastest pace since July 2016 and input price inflation also declined to the slowest rate for over three years. Sterling did muster some support from the data after all PMI releases printed above forecasts; suggesting the economy could be stabilising. Markets priced in a little more optimism of a Tory majority victory despite little net change in opinion polls. Technical trading factors compounded with the sustained break above 1.3000 enhanced by the Euro dropping through the 1.1765 mark. The Pound managed 7-month highs in pushing above 1.3100 on the Dollar and 30-month highs of 1.1834 on the Euro.
US ADP data recorded an increase in private-sector payrolls of 67,000 for November, well below consensus forecasts of 140,000 while the October increase was revised down to 121,000 from 125,000. The dollar declined after the AP data, especially with unease over a potential weak jobs report tomorrow. The dollar dipped to 4-week lows against the Euro moving above the 1.1100 level for the first time in a month. The ISM non-manufacturing index declined to 53.9 for November from 54.7 the previous month and below consensus forecasts of 54.5. The business activity index declined sharply to 51.6 from 57.0 previously, but there was a recovery in new orders. Employment and prices both increased at a slightly faster pace on the month. The dollar was resilient after the mixed data with some reassurance from the new orders component, although overall dollar sentiment remained fragile
The German PMI services index was revised up to 51.7 from the flash reading of 51.3 and the Euro-zone figure was revised higher to 51.9 from 51.5 despite a downward revision to France. The data overall remained close to 6-year lows and signalled weak overall growth with the Euro unable to make headway ahead of the New York open. The Euro settled near 1.1075 at the European close, little changed on the day as the Dollar recovered from intra-day lows with the single currency marginally higher today, although German factory orders declined 0.4% for November.