- U.K. CIPS/Markit Construction PMI weaker: 61.4 vs. 63.5 forecast, 64.2 previous
- European PPI m/m improves: 0.2% vs. 0.0% forecast, -0.2% previous; y/y -1.4% vs. -1.5% forecast, -1.4% previous
The U.K. construction PMI report kicked up volatility in the morning London trading session, and while the weak read of 61.4 did bring on a short bout of strong selling in the British pound, the momentum has already slowed with some fading going on in sterling pairs. GBP/USD made a quick drop from 1.6005 ahead of the news to 1.5975, but the pair is already back to pre-announcement levels.
The pound pair to buck the trend is GBP/CAD, up 131 pips (+0.74%) to 1.8272, which is a function of a broadly weak Canadian dollar. There is no new catalyst for the weakness, but I suspect we’re still seeing the effects of last week’s weak economic data (weak inflation and GDP reports), and possibly on oil (one of Canada’s largest export industries) prices getting crushed (WTI Crude now trading around 76.33, -3.11% on the session). Overall, it’s not a good day for the Loonie and the momentum isn’t slowing down:
USD/CAD is up 59 pips (+0.52%) to 1.1415, EUR/CAD is up 112 pip (+0.80%) to 1.4289, CAD/CHF is down 64 pips (-0.77%) to 8431
The forex calendar for the Tuesday afternoon London/morning U.S. session of the week is pretty light with trade balance reads from the U.S. (-$40.2B forecast vs. -$40.1B previous) and Canada (-300M CAD forecast vs. -610M CAD previous) at 1:30 pm GMT, and an IBD consumer optimism report (46 forecast vs. 45.2 previous) at 3:00 pm GMT. The Canadian trade balance may be the one to watch as it could either add to the current sell off in the Loonie or possibly slow it down. Overall, these are all mid-tier reports, so we probably won’t see a big reaction to any of them unless we get big surprises relative to the expected or previous numbers.
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