Dollar lags as euro surges

Focus yesterday fell on the euro which saw significant demand from traders due to expectations of an ECB taper as well as optimistic expectations for growth in 2018. EUR/USD rallied .75% to reach a 4 month high at 1.2081 in addition to EUR/JPY reaching a 2 year high of 135.40. GBP/EUR was little changed, largely due to Manufacturing PMI missing expectations with a print of 56.3 (forecast 58.0).

Previous Day's Market Highlights

Focus yesterday fell on the euro which saw significant demand from traders due to expectations of an ECB taper as well as optimistic expectations for growth in 2018. EUR/USD rallied .75% to reach a 4 month high at 1.2081 in addition to EUR/JPY reaching a 2 year high of 135.40. GBP/EUR was little changed, largely due to Manufacturing PMI missing expectations with a print of 56.3 (forecast 58.0).
 
The US dollar continued its weakness into 2018 after being the worst performing G10 currency of last year. USD/JPY fell by .5% to 112.05 and Cable rallied to break the 1.36 level for the first time since September 2017. Despite this, USD trading is likely to be quiet until Friday’s labour market report is released.
 
Sterling was relatively unchanged throughout the day, with weaker than expected manufacturing PMI figures failing to spark traders’ interest. Focus will now fall on the remainder of this week’s macro releases to set the tone for GBP into 2018.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.12501.1292 1.1509 1.1133 3.27%
GBP / USD 1.3589 1.3550 1.3220 2.88%
EUR / USD 1.2038 1.2034 1.1717 2.63%
GBP/AUD 1.7340 1.7999 1.7363 3.53%
GBP / NZD 1.9120 1.9836 1.9029 4.07%
GBP / CAD 1.7008 1.7468 1.6920 3.14%

Today's Market Highlights

Today sees a light economic calendar, with the first major release coming at 9:30AM with the UK Construction PMI. Sterling traders will be looking for a release above the forecast of 52.8, any reading above 50.0 would show expansion in the construction sector.
 
The afternoon session begins with the release of US ISM Manufacturing PMI at 3PM, forecast to show continued expansion with a reading of 58.1. Following this at 7PM is the release of FOMC Minutes from their December meeting, traders will be looking for hawkish comments regarding future US monetary policy and the number of rate hikes likely to take place in 2018.
 
Despite this, markets are likely to be quiet once again in the lead up to Friday’s US Jobs report.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP PMI Construction (Dec) 52.5 53.1
15:00 USD ISM Manufacturing PMI (Dec) 58.1 58.2
15:00 USD Construction Spending (MoM) (Nov) 0.5% 1.4%
19:00 USD FOMC Minutes