News & analysis


Sterling is trading broadly unchanged from the end of 2018 this morning against both USD and EUR. This morning’s major data release was the Manufacturing Purchasing Managers Index, which showed a substantial beat at 54.2 Tomorrow the equivalent index will be released for the construction sector.


The euro has had a volatile couple of days, staging a last minute rally against USD on the 31st of December and briefly reaching a two month high against USD this morning. This morning a UK think tank, the Centre for Economic and Business Research, warned that the Eurozone currency union would continue to come under pressure this year if not reformed. Eurozone Manufacturing Purchasing Managers’ Indices were released this morning, including for Italy and France which remained in contractionary territory, and Germany and Spain which remained in expansion.


The dollar has traded sideways in general over the last 24 hours after Monday’s Dallas Federal Reserve Manufacturing Activity Index fell sharply to reach a two year low. On Saturday President Trump tweeted that he had a “long and very good call” with Chinese President Xi Jinping about trade, potentially a good sign for risk appetite if ongoing trade tensions can be resolved. The US Government, in the meantime, remains in a state of partial shutdown ahead of Congress returning to Washington tomorrow. After Monday’s poor survey data, Markit Manufacturing PMI will be released today at 14:45 GMT.


The Canadian dollar had a relatively calm end to the year on Monday, though it was the worst performing G10 currency against the US dollar last quarter. Worsening risk appetite and plummeting crude oil prices were to blame, while domestic conditions in Canada seem reasonably strong for now and the Bank of Canada remains on a data-dependent hiking cycle. Markit Manufacturing Purchasing Managers Index data will be out at 15:30 GMT today.